Apple Inc. is a huge global tech company known for its innovative and high-quality products like iPhones, iPads, and Mac computers. They also offer services like the App Store and Apple Pay. But for Muslim investors, there’s an important question: ‘Is Apple stock halal or haram?’
To figure this out, we take a closer look at how Apple does business and manages its money, following the rules set by an organization called the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), which provides guidelines on what is allowed in Islamic finance. This helps us decide if Apple’s stock is ‘halal’ and in line with Islamic principles.
Apple Inc.,
Apple Inc. (Apple) manufactures, produces, and sells wearable technology, smartphones, tablets, and personal computers. The business sells digital content from third parties as well as accessories, software, and related services. Among Apple’s products are the iPhone, iPad, Mac, iPod, Apple Watch, and Apple TV. Additionally, it offers cloud services, advertising, payment, and payment processing services, as well as some consumer and business software programs, including iCloud, AppleCare, and Apple Pay for iOS, macOS, iPad, and watchOS. Apple offers and distributes digital content and applications via the App Store, Apple Arcade, Apple News+, Apple Fitness+, Apple Card, Apple TV+, and Apple Music.
Is Apple Stock halal?
To determine if Apple stock is halal, we will use the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Sharia standards of screening to assess its compliance. Based on the standard guidelines, we will evaluate Apple’s business activities, the revenue it generates from non-Shariah-compliant investments, its interest-bearing debt to total assets ratio, and its interest-bearing securities to total assets ratio.
Apple business activities
According to Sharia Law, a product is considered haram when it involves alcohol, pork, gambling, and interest-based financial services. However, Apple Inc. is widely recognized for its innovative technology and high-quality products, which align with the principles of Sharia law and have a significant impact on the global market. Here is a quick highlight of some of Apple’s products that may violate Islamic moral values or that should be used with caution.
- Apple Music and TV+: These services offer digital content, including a wide range of television shows and songs, accessible to subscribers for a monthly fee. While some of this content aligns with Islamic principles, there is also content that includes foul language, nudity, violence, blasphemy, and acts that promote values contrary to Islam. Therefore, Muslims should exercise caution when using Apple Music and TV+.
- Apple Card: The Apple Card, launched in 2019 in partnership with Goldman Sachs, offers cashback benefits and interest-free financing for Apple purchases but also charges interest on unpaid balances. Interest is seen as haram (forbidden) in Islam due to its unfair and exploitative nature. Consequently, Muslims should stay away from the Apple Card because it is considered haram.
- App Store: This platform allows users to purchase and download apps for their smartphones. While many of these applications are suitable and helpful for Muslims, some involve gambling, dating, astrology, music streaming, video streaming, and more that are considered inappropriate or questionable for Muslims to use.
Apple primarily generates its income from selling electronics, software, and services, which are considered halal. However, Muslims need to use Apple products responsibly and according to Islamic principles.
Apple’s non-halal-compliant income
According to Apple’s 2023 3rd Quarter Report screened by Musaffa, Apple’s halal income is $282.84 billion, while its doubtful income is $10.95 billion, and its non-halal income is $2.77 billion. To calculate the percentage of non-halal business activity, the sum of doubtful and non-halal income is divided by its total revenue of $296.55 billion, resulting in a non-halal business activity percentage of 4.26%.
The estimate of 4.26% falls within the permissible limit of 5% according to AAOIFI’s standards, which means it is considered halal or compliant with those standards. AAOIFI standard state:
“The amount generated from the prohibited component does not exceed 5% of the total income of the corporation irrespective of the income being generated by undertaking a prohibited activity, by ownership of a prohibited asset or in some other way. If a source of income is not properly disclosed then more effort is to be exerted for identification thereof giving due care and caution in this respect”
Apple’s interest-bearing debt to total-assets ratio
Islamic finance law prohibits investing in businesses involved in interest-based transactions (riba/usury) and businesses heavily reliant on debt. According to AAOIFI standards, a business’s total interest-bearing loans should not exceed 30% of its total market value for its stock to be considered halal.
Apple’s total interest-bearing debt in the 2023 3rd Quarter Report is $109.28 billion, which results in a 4.61% interest-bearing debt ratio. This falls within AAOIFI’s permissible limit of 30%. It states that “The collective amount raised as loan on interest – whether long-term or short-term debt- does not exceed 30% of the market capitalization of the corporation, knowingly that raising loans on interest is prohibited whatsoever the amount is”
Apple’s interest-bearing securities to total assets ratio
Apple’s interest-bearing assets are estimated to be $166.54 billion, which is 7.02% of its total market value or asset value of $2.37 trillion in its 2023 3rd Quarter Report. This means that 7.02% of Apple’s total assets are invested in things that earn interest. Importantly, this ratio complies with AAOIFI’s permissible limit of 30%, as stated in their standards
“That the total amount of interest-taking deposits, whether short, medium or long-term, shall not exceed 30% of the market capitalization of total equity, knowingly that interest-taking deposits are prohibited whatsoever the collective amount is”
The above analysis summarizes that Apple products and mode of operation mostly comply with Islamic finance and ethical standards, but users should exercise caution and use their discretion, especially when using specific Apple services and products like Apple Music and TV+, Apple Card, and App Store.
Conclusion
Based on our findings, the answer to the question ‘Is Apple stock halal?’ is yes, but investors should monitor Apple’s halal status. In evaluating whether Apple stock is halal, we’ve examined a range of factors, including its business activities, income sources, debt ratios, and adherence to Islamic finance standards. Apple’s core business activities align well with Islamic principles, as it primarily generates its income from halal sources, such as the sale of electronics, software, and services. While certain products and services within the Apple ecosystem may raise concerns for Muslim consumers, such as Apple Music and TV+ or the Apple Card, these concerns can be addressed through careful and responsible use.
Moreover, our analysis indicates that Apple’s non-halal income remains within the permissible limits set by AAOIFI’s standards, and its financial practices, including the interest-bearing debt and interest-bearing securities ratios, comply with Islamic finance principles. These findings suggest that Apple generally aligns with Islamic finance and ethical standards, making it a viable option for Muslim investors.
In the end, whether Apple stock is considered halal or not may vary depending on individual beliefs and interpretations, but the company’s commitment to innovation and the quality of its products remain undeniable, making it a key player in the global market.
