US defense official overseeing AI reaped millions selling xAI stock after Pentagon entered agreement with company

Emil Michael, the Pentagon’s under secretary for research and engineering, made a significant financial gain of up to $24 million from the sale of his private investment in Elon Musk’s AI company, xAI, generating a return of 400% to 4,800%.
Michael held the AI shares through a company called KQ Partners, and the investments were valued between $500,000 and $1 million at the time he joined the department in May 2025.
During Michael’s tenure, the Pentagon formed two agreements with xAI: first, in July, marking Grok as one of four AI providers, and second, in December, which involved the deployment of AI capabilities.
Michael did not sell his xAI shares until January 9, 2026, which was required to comply with conflict of interest laws, raising ethical concerns among observers.
Legal experts argue that Michael’s actions could have potentially violated federal laws prohibiting government officials from benefiting financially from their official duties.
The Department of War stated that Michael complied with all ethics laws and regulations, though questions persist about the nature of his prior investment and subsequent actions.
Michael, well-known in both the defense and tech sectors, played a pivotal role in the Pentagon’s aggressive push for AI integration, notably clashing with AI firm Anthropic over ethical concerns.
Musk’s xAI, which created the Grok chatbot, has faced controversy, particularly regarding the development of sexualized deepfakes.