Pentagon AI Chief's Third Payday: Emil Michael Sold Perplexity Stock for Up to $25M While Shaping Military AI Policy

Emil Michael — the undersecretary of defense for research and engineering who also serves as the Pentagon’s chief technology officer, and by extension the most powerful person shaping how the US military buys and deploys AI — sold his entire stake in Perplexity AI in June for between $5 million and $25 million, according to financial disclosures reviewed exclusively by The Guardian. It is his third AI-adjacent stock exit since the start of the year, and it lands in the middle of the most consequential fight over military AI policy in a generation.

The disclosures arrived just days after US District Judge Rita Lin vacated the Pentagon’s “supply chain risk” blacklist of Anthropic, ruling that the designation illegally retaliated against the Claude maker for refusing to allow its models to be used for mass surveillance and autonomous lethal operations. Michael was the public face of that blacklist campaign. Anthropic competes directly with Perplexity and xAI — the two companies Michael held stock in — for the same defense dollars.

Three exits, one year

Federal financial disclosures list dollar ranges rather than exact figures, which is why every number in this story is a bracket. But the pattern is unambiguous:

• xAI, January 9. Michael declared a position in Elon Musk’s xAI worth $500,000 to $1 million when he entered government in May 2025. He sold it on January 9, 2026 for between $5 million and $25 million — a gain The Guardian previously reported at 400% to as much as 4,800%.
• Brex, April. He sold holdings in Brex LLC, the financial software company backed by Peter Thiel and acquired by Capital One that same month, for at least $5 million. He had reported in March 2025 that those holdings were worth at most $750,000. The profit could have been as large as $24 million or as little as $4.25 million — a realized gain of at least 473%.
• Perplexity, June. The newest disclosure shows the June sale of his Perplexity shares for $5 million to $25 million. The records do not reveal whether he profited, because of the wide ranges involved — and, notably, they don’t say whether the shares sold were vested, unvested, or both.

Stacked together, the three exits mean the official overseeing military AI policy has realized somewhere between $15 million and $75 million in stock sales during his first year in office, most of it from companies with direct or adjacent interests in Pentagon AI contracting.

The divestiture timeline that ethics lawyers keep flagging

The most scrutinized sequence involves xAI. The Office of Government Ethics issued Michael a divestiture certificate for his xAI holdings on December 18, 2025. Four days later — December 22 — the Pentagon signed a fresh agreement to deploy xAI’s Grok on its classified networks. Michael did not actually complete the sale until January 9, 2026, meaning the divestiture window overlapped with a contract decision benefiting a company he still held stock in.

The Perplexity entanglement runs deeper than equity. His 2025 disclosure filings show he received a personal loan from Perplexity of $250,000 to $500,000 at 4.57% interest, taken before he joined government. He also sat on Perplexity’s advisory board, stepping down at the start of 2025 before joining the Trump administration that May. Some of his Perplexity stock was vested and some unvested; in his ethics agreement he pledged not to profit from the unvested shares. Whether June’s sale honored that pledge is exactly what the filings don’t say.

Richard Painter, White House ethics counsel under George W. Bush and now a persistent critic of the arrangement, told The Guardian: “He should have sold all interest in the company before he started working. That’s the way we would have done it back when I was working for a president.” Painter was careful to note that the ownership itself likely isn’t illegal — the criminal conflict-of-interest statute requires a particular matter with a direct and predictable effect on the holding — but that most administrations would have demanded divestiture before day one, purely on appearance grounds.

A Pentagon spokesperson pushed back firmly: Michael and other defense officials “are in full compliance with ethics laws and regulations. Any claims otherwise are false,” pointing to the department’s “rigorous, multi-layered ethics framework.”

Why the Anthropic blacklist makes it sting

The Lever first reported Michael’s Perplexity holdings in March, framing him as “the Pentagon’s AI gatekeeper” holding stock in a rival of the company he was trying to blacklist. Gizmodo followed with the sharper version of the question: the Pentagon’s biggest champion of blacklisting Anthropic had “a few million reasons” for his stance.

The timeline of that campaign, now partly undone by Judge Lin’s ruling:

• February 19 — Michael, as Pentagon CTO, publicly urged Anthropic to “cross the Rubicon” on military AI use cases as negotiations stalled.
• February 26-27 — Talks broke down; Trump ordered federal agencies to stop using Anthropic’s technology on February 27.
• March, days later — The Pentagon formally branded Anthropic a “supply chain risk,” barring military contractors from doing business with it, and set a 180-day removal deadline.
• August 27 — Judge Lin vacated the designation, ruling it unconstitutional First Amendment retaliation, and issued a permanent injunction.

By the time of the ruling, OpenAI had already absorbed the Pentagon contract originally meant for Anthropic, and the department had signed classified-network deals with seven other AI companies — xAI among them. The competitive reshuffling happened on Michael’s watch, while disclosure forms now show he held financial positions in at least two beneficiaries’ ecosystems.

Context: the revolving door gets faster

Michael’s background makes the story hard to caricature precisely because it’s already so colorful. He was chief business officer at Uber from 2014 to 2017, an era remembered for BuzzFeed News’ 2014 report that he privately floated digging up dirt on critical journalists (he said the comment, made at what he believed was an off-record dinner, didn’t reflect his views). He later consulted for Brex, appeared on a tech podcast in December whose sponsor was Brex — while he was still an investor — in an episode titled “Misunderstood Power: Emil Michael on the Truth about DOW and Defense Tech.”

Meanwhile Perplexity itself is in talks with Nvidia for a funding round valuing the company above $30 billion — more than 50% above its September 2025 valuation of $20 billion. Whatever Michael’s June sale netted within its wide bracket, it liquidated a position in a company whose value has only climbed since.

The larger issue is structural. As AI procurement becomes the Pentagon’s biggest technology spend, the officials arbitrating which labs win classified contracts increasingly come from — and return to — the venture-backed AI ecosystem. Disclosure ranges of $5 million to $25 million make precise accounting impossible by design. Judge Lin’s ruling restored one check on the process; the disclosure beat is now supplying another. Whether either changes who holds stock while they hold the pen is the question every ethics lawyer in Washington is now asking.