Emil Michael, the Pentagon's undersecretary of defense for research and engineering and the department's chief technology officer, sold his stake in Perplexity AI in June for between $5 million and $25 million, according to financial disclosures reviewed by The Guardian.

As the Pentagon official responsible for shaping defense technology investments, Michael occupies a position with influence over the AI vendors competing for military contracts, which is why the timing and composition of his personal holdings have drawn scrutiny from government-ethics watchers.

The Perplexity exit is Michael's third AI-adjacent stock sale this year. It follows a $24 million gain on xAI in January and at least $5 million from the sale of a stake in Brex in April. Michael previously sat on Perplexity's advisory board, stepping down at the start of 2025 before joining the Donald Trump administration that May. He is best known publicly as the former chief business officer of Uber, where he was a central figure in the company's early growth years.

xAI Sale and Its Timing

Michael also held a stake in Elon Musk's xAI, reported at $500,000 to $1 million when he entered government. He sold it on January 9 for between $5 million and $25 million — a gain of up to 4,800%, according to IBTimes UK.

The timing drew attention: the Office of Government Ethics issued him a divestiture certificate for the xAI holdings on December 18. Four days later, the Pentagon signed a new agreement to deploy xAI's Grok on its classified networks. Michael did not actually sell his xAI shares until January 9. Federal officials routinely hold financial interests in companies when they enter government, but they are generally expected under ethics rules to divest holdings that conflict with their duties — the point of contention raised in Michael's case.

Loan and Ethics Agreement

Before joining government, Michael took a personal loan from Perplexity of between $250,000 and $500,000 at 4.57% interest, according to his 2025 disclosures. In his ethics agreement, he pledged not to profit from unvested Perplexity shares, though the filings do not specify whether June's sale involved vested shares, unvested shares, or both.

The Anthropic Blacklist Fight

The disclosures arrive as Michael has spent the year as the public face of the Pentagon's battle with Anthropic, a Claude developer that competes directly with Perplexity and xAI for the same government contracts. Trump ordered federal agencies to stop using Anthropic's technology on February 27, and days later the Pentagon formally designated the company a "supply chain risk," barring military contractors from doing business with it.

U.S. District Judge Rita Lin ruled last week that the blacklist illegally retaliated against Anthropic for refusing to allow its models to be used for mass surveillance and autonomous lethal operations. She vacated the designation and issued a permanent injunction. By that point, OpenAI had already taken over the Pentagon contract once intended for Anthropic, and the department had signed classified-network deals with seven other AI companies, including xAI.

The fight matters beyond one vendor: the Pentagon has become one of the most consequential customers in the AI industry, and which labs win classified-network access shapes the commercial pecking order for frontier-model developers. The lawsuit and injunction are part of a broader running tension between AI developers' usage policies and the government's demand for military applications.

Ethics Experts Respond

Ethics specialists have criticized the sequencing of Michael's sales. Richard Painter, a former White House ethics lawyer under President George W. Bush, told The Guardian that Michael "should have sold all interest in the company before he started working." A Pentagon spokesperson pushed back, saying Michael and other defense officials "are in full compliance with ethics laws and regulations," and pointing to the department's multi-layered ethics review process.

Separately, Perplexity is in talks with Nvidia for a new funding round that would value the company above $30 billion — more than 50% higher than the $20 billion valuation it held in September 2025. That context means Michael's June exit, whatever its ethics profile, landed amid a sharp rise in the company's value.