Emil Michael, who serves as the U.S. Deputy Secretary of Defense for Research and Engineering and the Pentagon's chief technology officer, sold his stake in Perplexity, a company specializing in artificial intelligence developments, in June of this year. The transaction amount is estimated to range between $5 million and $25 million — these figures are disclosed in financial documents filed by the official as part of mandatory reporting requirements.
It is important to note that prior to his appointment to the administration of Donald Trump, Michael served on the advisory board of this AI startup. This created a potential conflict of interest, given his current role in shaping the defense department's technology policy. Selling the assets appears to be a logical step to comply with ethical standards and avoid accusations of leveraging his official position.
However, this is not the only major deal of its kind. Earlier this year, Michael also divested from xAI, a company owned by Elon Musk. The volume of this transaction also reached an impressive sum — up to $25 million. Thus, over a relatively short period of time, the senior defense official converted significant stakes in two leading players in the generative AI market into cash.
Such moves underscore the growing intersection between the private technology sector and state defense procurement. In an era when algorithms and computing power are becoming strategic resources, the decisions of figures like Michael are closely monitored by the market and regulators.
My analysis. The sale of assets in Perplexity and xAI is not merely a formality. It is a signal that the Pentagon is seriously considering AI tools as part of the defense ecosystem, meaning any ties between officials and private companies will be under the microscope. For the market, this implies that in the coming years we will see stricter disclosure rules for government employees working at the intersection of technology and security. Investors should account for increased regulatory risks when evaluating AI startups vying for government contracts.