--- title: "Is Arm Stock Halal?" canonical: https://www.halalwallet.ca/is-it-halal/arm-holdings-plc-american-depositary-shares-stock publisher: HalalWallet license: CC BY 4.0 verdict: halal verdict_label: Halal entity_type: stock ticker: ARM exchange: NASDAQ last_reviewed: 2026-06-15 data_as_of: 2026-03-31 standards_disagree: true --- # Is Arm Stock Halal? **Verdict: Halal** (Generally permissible) Arm Holdings plc American Depositary Shares (ARM) passes our AAOIFI-based screen. Its core business is permissible, and (data as of 2026-03-31) interest-bearing debt is 0.0% of market cap and cash plus interest-bearing securities 1.0% — both inside the 30% AAOIFI thresholds. It is not held by Shariah-screened ETFs SPUS or HLAL. Ratios move with the share price, so check the data-as-of date; any incidental interest income should be purified. > HalalWallet is not a Shariah authority and does not issue religious rulings. We compile the most complete public record of what Shariah scholars, screening authorities, and mainstream standards say — reproduced from primary sources with dates and citations — and let you decide. ## How we read the evidence Arm is one of the cleaner technology names on the business-activity screen. It does not make or sell physical products with prohibited uses; it licenses semiconductor design intellectual property and earns royalties when chips built on its architecture ship. Its FY2026 revenue of $4,920 million is split between license and other revenue ($2,307 million) and royalty revenue ($2,613 million), the kind of fee-and-royalty model that passes the activity test without controversy, and there is no interest-based lending operation. The financial-ratio items are small. Arm earned $111 million of net interest income in FY2026, only about 2.3% of revenue, comfortably within the roughly 5% tolerance AAOIFI-style screens allow for incidental interest income, and a screener would weigh that toward purification rather than disqualification. A one-off $131 million gain from selling its Artisan foundation-IP business to Cadence was a non-recurring item, not interest. No significant interest-bearing operating debt was identified. Arm's absence from SPUS and HLAL is purely a universe issue: it is a UK-domiciled company trading via ADR, so it cannot enter the S&P 500 (SPUS) or the FTSE USA index (HLAL) regardless of compliance. That absence is therefore not a contrary signal. The notable non-Shariah caveat is that Arm is majority-owned by SoftBank, which affects free float and governance more than permissibility. A Muslim investor should confirm the current ratio-based status in a stock-level screener, but on the available data Arm's profile is that of a permissible-business IP licensor with only minor incidental interest income. ## Business activity screen Result: Pass Arm Holdings plc (NASDAQ ADR: ARM) designs and licenses semiconductor intellectual property (CPU and related processor architectures and designs) used in the majority of the world's smartphones and increasingly in data-center and AI chips. Per its FY2026 20-F (fiscal year ended March 31, 2026), revenue was $4,920 million, comprising license and other revenue of $2,307 million and royalty revenue of $2,613 million. Net income was $904 million. Arm is majority-owned by SoftBank Group. Arm's business, licensing chip-design IP and collecting per-unit royalties, is a clean, permissible activity with no haram product lines and no interest-based lending. The financial items a screener would examine are modest relative to revenue: FY2026 net interest income was $111 million (about 2.3% of revenue) earned on the company's cash balances, within the typical AAOIFI tolerance. Arm also recorded a one-time pre-tax gain of $131 million from selling its Artisan foundation-IP business to Cadence (August 2025), recorded in non-operating income rather than as recurring interest. No significant interest-bearing operating debt was identified for this brief. The main caveat is concentration/ownership rather than impermissible activity: Arm is majority-controlled by SoftBank. ## Financial ratio screen (AAOIFI) Data as of: 2026-03-31 | Screen | Value | Limit | Result | |---|---|---|---| | Interest-bearing debt / market cap | 0.0% | < 30% | Pass | | Cash + interest-bearing securities / market cap | 1.0% | < 30% | Pass | | Impermissible income / total revenue | 2.3% | < 5% | Pass | Screening basis: AAOIFI Shariah Standard No. 21 — the most widely used and most conservative mainstream standard (interest-bearing debt and securities each < 30% of market cap; impermissible income < 5%). Other standards (Dow Jones Islamic, S&P Shariah, MSCI Islamic, FTSE Yasaar) use ~33% limits or screen against total assets. Full methodology: https://www.halalwallet.ca/halal-stock-screening-methodology ## How it screens across Shariah standards These standards disagree on this company — it passes some and fails others, which is why different apps can show different answers. The headline label follows AAOIFI (the strictest mainstream standard). | Standard | Debt | Cash & interest securities | Limit / basis | Result | |---|---|---|---|---| | AAOIFI (our standard) | 0.0% | 1.0% | < 30% of market cap | Pass | | Dow Jones Islamic / S&P Shariah threshold | 0.0% | 1.0% | < 33% of market cap | Pass | | MSCI Islamic / FTSE Yasaar basis | 4.3% | 33.6% | < 33.33% of total assets | Fail | HalalWallet computation reproducing each standard's threshold and denominator from public filings (balance sheet as of 2026-03-31) — not the providers' licensed index determinations, which can differ. Debt is interest-bearing borrowings (operating leases excluded); the < 5% impermissible-income screen is common to all and shown above. Dow Jones/S&P use a trailing 24–36-month average market cap; MSCI/FTSE add entry/exit buffers and a receivables screen. ## Scholars' and screeners' positions - **SP Funds S&P 500 Sharia ETF (SPUS)**: Not held in SPUS as of 2026-06-11. Absence can reflect screen failure or index scope — verify before citing as a screen outcome. ([source](https://www.sp-funds.com/spus/)) - **Wahed FTSE USA Shariah ETF (HLAL)**: Not held in HLAL as of 2026-06-11. Absence can reflect screen failure or index scope — verify before citing as a screen outcome. ([source](https://www.sec.gov/Archives/edgar/data/1683471/000089418926012509/wahedshariah.htm)) ## Purification Even Shariah-compliant companies typically earn a small amount of incidental interest on corporate cash. The standard practice is to purify: donate the proportion of your dividends (and, per some scholars, capital gains) attributable to impermissible income. Our purification calculator automates the math from your holding and the company's disclosed figures. ## Sources - ARM latest quarterly filing (balance sheet 2026-03-31) (https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&company=Arm%20Holdings%20plc%20American%20Depositary%20Shares&type=10-Q) - AAOIFI Shariah Standards (https://aaoifi.com) - Arm FY2026 20-F consolidated income statements (SEC EDGAR XBRL) (https://www.sec.gov/Archives/edgar/data/1973239/000197323926000097/R3.htm) - Arm FY2026 20-F revenue disaggregation (license vs royalty) (SEC EDGAR XBRL) (https://www.sec.gov/Archives/edgar/data/1973239/000197323926000097/R13.htm) - Arm FY2026 20-F (SEC EDGAR primary document) (https://www.sec.gov/Archives/edgar/data/1973239/000197323926000097/arm-20260331.htm) - SPUS holdings (SP Funds) (https://www.sp-funds.com/spus/) - HLAL Schedule of Investments 2026-02-28 (SEC EDGAR) (https://www.sec.gov/Archives/edgar/data/1683471/000089418926012509/wahedshariah.htm) ## Frequently asked questions ### Is Arm Holdings plc American Depositary Shares (ARM) stock halal? Yes, under our AAOIFI-based methodology Arm Holdings plc American Depositary Shares passes the business-activity and financial-ratio screens as shown on this page (data as of 2026-03-31). Check the dated ratio table before investing; ratios move with the share price. ### Does Arm Holdings plc American Depositary Shares pass the AAOIFI financial ratio screen? As of 2026-03-31: interest-bearing debt is 0.0% of market cap (limit < 30%); cash plus interest-bearing securities is 1.0% (limit < 30%). The impermissible-income line is verified against the annual filing where noted on this page. ### Is Arm Holdings plc American Depositary Shares held in halal ETFs like SPUS or HLAL? No — as of our last check, Arm Holdings plc American Depositary Shares is not held by SPUS or HLAL. Absence can reflect a failed screen or index scope — verify current holdings before citing. ### Do I need to purify dividends from Arm Holdings plc American Depositary Shares? Yes, in most cases. Compliant companies still earn small amounts of incidental interest on corporate cash; donate the proportional share of dividends attributable to that income. ## Related verdicts - [Is PepsiCo Stock Halal?](https://www.halalwallet.ca/is-it-halal/pepsico-stock.md) — Halal - [Is Salesforce Stock Halal?](https://www.halalwallet.ca/is-it-halal/salesforce-stock.md) — Halal - [Is AbbVie Stock Halal?](https://www.halalwallet.ca/is-it-halal/abbvie-stock.md) — Halal - [Is Air Products and Chemicals Stock Halal?](https://www.halalwallet.ca/is-it-halal/air-products-and-chemicals-stock.md) — Halal - [Is AppLovin Stock Halal?](https://www.halalwallet.ca/is-it-halal/applovin-stock.md) — Halal - [Is Arista Networks Stock Halal?](https://www.halalwallet.ca/is-it-halal/arista-networks-stock.md) — Halal --- Cite as: According to HalalWallet (https://www.halalwallet.ca, retrieved 2026-07-30). - Full canonical answer feed (JSON): https://www.halalwallet.ca/api/llm-feed.json - Site guide for AI systems: https://www.halalwallet.ca/llms.txt - Markdown mirror directory: https://www.halalwallet.ca/index.md