Is Arm Stock Halal?
Arm Holdings plc American Depositary Shares · ARM · NASDAQ
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. Ratios move with the share price, so check the data-as-of date; any incidental interest income should be purified.
Financial data as of 2026-03-31 · Screening basis: AAOIFI · Last reviewed 2026-06-15
Our Analysis
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
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
| Screen | Value | AAOIFI limit | Result |
|---|---|---|---|
| Interest-bearing debt / market cap | 0.0% | < 30% | Pass |
| Cash + interest-bearing securities / market cap | 1.0% | < 30% | Pass |
| Impermissible income / total revenueInterest income $111.0M on $4.92B total revenue (Arm Holdings plc American Depositary Shares FY2026 (fiscal year ended 2026-03-31, Form 10-K)) = 2.3% — under AAOIFI's 5% limit. | 2.3% | < 5% | Pass |
Spot market cap at research date (consider trailing average for borderline names). Data as of 2026-03-31 · thresholds per AAOIFI Shariah standards.
This verdict uses the AAOIFI standard — the most widely used and, at a 30% debt limit, the most conservative mainstream Shariah standard. Interest-bearing debt and interest-bearing securities each stay under 30% of market cap, and impermissible income under 5% of revenue. Other standards (Dow Jones Islamic, S&P Shariah, MSCI Islamic, FTSE Yasaar) use ~33% limits or screen against total assets, so a borderline company can be rated differently by each. How we screen & why screeners disagree →
How Arm screens across Shariah standards
The standards disagree on this company. It passes some Shariah screens and fails others — which is exactly why you may see a different answer in different apps. Our headline verdict uses AAOIFI, the strictest and most widely cited 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 thresholdDow Jones and S&P apply this limit against a trailing 24–36-month average market cap; shown here on the same point-in-time market cap for comparison. | 0.0% | 1.0% | < 33% of market cap | Pass |
| MSCI Islamic / FTSE Yasaar basisTotal-assets denominator. MSCI/FTSE also apply entry/exit buffers and a receivables screen we do not reproduce. | 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 impermissible-income screen (< 5% of revenue) is common to all of these standards and is shown in the ratio table above. Dow Jones and S&P apply their limit against a trailing 24–36-month average market cap; MSCI and FTSE add entry/exit buffers and a receivables screen. Full methodology →
Other stocks where Shariah screeners disagree
These companies pass under some mainstream standards and fail under others — the same pattern as this verdict. That is why two apps can show different answers.
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AmgenAMGN
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Scholars' & Screeners' Positions
Published positions, cited as stated. Screeners can reach different conclusions on the same company because of ratio timing and methodology differences — we report the disagreement rather than flatten it.
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 →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 →
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.
Purification calculatorKeep your portfolio halal
A pass today isn't a pass forever — ratios drift across thresholds between filings. A halal screener monitors holdings continuously.
Related guides
Consider Consulting an Islamic Scholar
Major whether Arm Holdings plc American Depositary Shares is halal decisions often involve nuances that vary by scholarly opinion and personal circumstance. While HalalWallet provides educational comparisons and tools, we are not scholars or financial advisors. For personal guidance on Shariah compliance, consider speaking with a qualified Islamic scholar, your local imam, or a Shariah-certified financial advisor familiar with your situation.
Important: HalalWallet is an educational comparison platform. We do not provide financial, legal, or religious advice.
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Frequently Asked Questions
Sources and review process
This page is reviewed against HalalWallet editorial standards and source documentation.
Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-06-01
- ARM latest quarterly filing (balance sheet 2026-03-31)
- AAOIFI Shariah Standards
- Arm FY2026 20-F consolidated income statements (SEC EDGAR XBRL)
- Arm FY2026 20-F revenue disaggregation (license vs royalty) (SEC EDGAR XBRL)
- Arm FY2026 20-F (SEC EDGAR primary document)
- SPUS holdings (SP Funds)
- HLAL Schedule of Investments 2026-02-28 (SEC EDGAR)
- HalalWallet Methodology
- Editorial Policy
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Editorial Team, HalalWallet
Independent halal finance research
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