Amazon Stock Halal or Haram? A good buy?

Amazon Stock Halal or Haram? A good buy?

We’ll start our analysis by first understanding Amazon’s business than their financials and end with my Halalness rating for the stock and see if Amazon Stock Halal or Haram. 

Before I start, if you need Halal funding and you live in the United States apply at It’s free and won’t affect your credit score.

Alternatively, if you’re looking for a halal investment, to diversify your holdings with more than just stocks and you earn more than $200,000 annually, go to and apply to become an investor.

Amazon’s Business

The very first questions I ask myself when analyzing the strength of a particular business are:

  • Do I understand the business? 
  • Would I be a customer of this business?
  • If I am a customer of the business, what has been my experience as a customer of this business?

If I’ve had bad experiences with the product, then no further analysis is needed. I don’t invest.

In the case of Amazon, I’ve been a customer of their various services for more than 10 years now and I have to say, I’ve never had a single bad experience with them.

Every time I deal with them I am always impressed with how well they take care of their customers.

Let me give you an anecdote…

I had my nieces over a couple years back and while they were playing with my TV remote they ended up mistakenly signing me up for a subscription that I didn’t want.

I didn’t find out until I got billed for it.

I sent Amazon an email explaining what happened and here’s how they replied:

First of all, how did they know my niece was pretty? My theory is that they looked me up online, caught a glimpse of how handsome I was and extrapolated from there, but I digress.

This is a small example of great customer service that will not show up on a balance sheet or income statement. It’s very difficult to write an algorithm that can detect this type of high quality customer service. For this reason, I pay a lot of attention to these details because they represent one of the few ways a retail investor can gain insights into a company’s prospects that a large investment firm may fail to account for.

Amazon’s Revenue Breakdown

Amazon’s revenues come from the following sources:

  • First and foremost, the company is an online retailer that sells goods directly to customers through their site Amazon is known for having the lowest prices on many items and the ability to deliver in 1-2 days. They’re constantly working on shortening this time and increasingly they offer same day delivery for many of their products.
  • They provide a platform for other retailers to sell their products. Amazon retains a portion of the sales price as commission.
  • Amazon Prime subscriptions. With a Prime membership, customers pay an annual fee in exchange for unlimited free two-day or same-day shipping on eligible items and a slew of other perks the list for which is constantly growing.
  • Amazon sells its own line of electronics such as the e-reader, the Kindle, and the e-book and mobile application purchases offered to Kindle owners.
  • Physical stores, WholeFoods grocery stores being an example.
  • Amazon Web Services (AWS), a cloud computing market leader which Amazon provides access to on a pay-as-you-go basis. This is a very high margin business that provides a good chunk of Amazon’s overall net income.

Here’s a breakdown of how these business segments contributed to Amazon’s 2019 Sales:

“Other” primarily refers to advertising Amazon provides for third parties on its site. Amazon is currently the 3rd largest online advertiser behind Google and Facebook and revenue from this business is growing rapidly. In Q4 of 2019 Amazon’s “other” category, was up 41% to $4.78 billion.

Amazon Stock: A buying opportunity?

Amazon is an amazing business.

However, with investments it’s not enough to simply identify amazing businesses, you have to look at the price as well since every business can be a bad investment if you pay too much for it.

As of the date of writing this article, Amazon’s Price/Earnings ratio is around 80 and it’s forward PE ratio is around 60.

So while Amazon ownership is quite attractive, it isn’t cheap.

Granted, PE isn’t a good metric for Amazon because it famously reinvests a good portion of its earnings back into its business.

Personally, I think if the forward PE ratio gets to the lower 50s it becomes a no-brainer buy.

Ultimately, when choosing stocks, that’s what I look for i.e. the no-brainers.

Considering its price level today, I’m not sure Amazon meets that criteria just yet.

Is Amazon Stock Halal to Invest in?

See our most recent Halal report for Amazon here.

The three criteria I use to judge the halalness of a particular stock are the following:

  • Is the core business of the company halal?
  • Does the company produce more good than harm?
  • What is my gut feeling about investing in the company?

Amazon’s Core Business

As we saw in the breakdown of Amazon’s business, nothing in particular stands out as being inherently haram. However, there are three areas of concern as it relates to the halaness of its business and they are:

  • Amazon movies/shows
  • Amazon music 
  • Amazon credit cards.

While Movies/shows and Music aren’t inherently haram, depending on their content they certainly can be.

Credit cards are haram in so much as they charge and collect interest.

It’s tough to say how much each of the aforementioned areas of concern contributes to Amazon’s business but they will certainly affect the Halalness rating I assign to it.

Does Amazon produce a Net Good for Society?

Amazon provides a massive amount of value to its customers through its services and low prices.

Additionally, sellers and businesses alike benefit from the platorm Amazon provides through its site and Amazon Web Services.

Not to mention all the other value Amazon provides through it’s various products and services.

So I’m comfortable saying that the good Amazon produces far outweighs its harm.

My Gut Feel

As mentioned when discussing Amazon’s core business, the matters of Amazon music, movies, and shows do weigh a bit on my feelings towards owning the company. Although, generally my gut feeling is positive towards the company.

From everything said, on a scale from 1 to 10 with 1 being absolutely haram e.g Budweiser and 10 being absolutely halal e.g. (shameless plug), I’m going to give Amazon stock a 7/10 halalness rating.

I would love to hear from you in the comments!


I’m not your financial advisor, this article is not meant to be investment advice. Make sure you do your own due diligence before making any investment decisions.

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