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.
Michael had previously served on Perplexity’s advisory board. He stepped down at the start of 2025 before joining the Donald Trump administration that May.
Another AI investment exit this year
The Perplexity sale was not Michael’s only exit in 2025. According to IBTimes UK, he also held a stake in Elon Musk’s xAI that was reported at $500,000 to $1 million when he entered government service. He later sold that holding on January 9 for between $5 million and $25 million, a return that could reach 4,800%.
The sequence has drawn attention. The Office of Government Ethics issued him a divestiture certificate for the xAI stake on December 18. Four days later, the Pentagon signed a new agreement to deploy xAI’s Grok on classified networks. Michael did not complete the sale until January 9.
Perplexity loan and ethics filing details
Michael’s 2025 disclosures also show that, before joining government, he took a personal loan from Perplexity worth between $250,000 and $500,000 at an interest rate of 4.57%.
In his ethics agreement, Michael said he would not profit from unvested Perplexity shares. The filings, however, do not say whether the June sale involved vested shares, unvested shares, or a mix of both.
Disclosures arrive during Pentagon dispute with Anthropic
The disclosures surfaced as Michael has spent much of the year as the public face of the Pentagon’s dispute with Anthropic, the developer of Claude. Anthropic competes directly with Perplexity and xAI for the same government spending.
Donald Trump ordered federal agencies to stop using Anthropic’s technology on February 27. Days later, the Pentagon formally labeled the company a "supply chain risk," barring military contractors from doing business with it.
Last week, U.S. District Judge Rita Lin ruled that the blacklist illegally retaliated against Anthropic after the company refused to let its models 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. The department had also signed classified-network agreements with seven other AI companies, including xAI.
Ethics criticism and Pentagon response
Ethics specialists criticized the timeline. 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 disputed that view, saying Michael and other defense officials "are in full compliance with ethics laws and regulations," and pointed to the department’s multi-layered ethics review process.
Perplexity in funding talks
Perplexity is also in talks with Nvidia for a new funding round that would value the company at more than $30 billion, according to the report. That would be more than 50% above the company’s $20 billion valuation in September 2025.