3 Great Stocks Warren Buffett Probably Can't Buy, But You Can

In the realm of value investing, few names loom as large as Warren Buffett. The Oracle of Omaha’s preference for massive, stable companies with durable moats—think Coca-Cola or Apple—often leaves smaller, high-growth stocks off his radar. But for retail investors, these overlooked opportunities can be goldmines. Here are three small-cap stocks that are too tiny (or too risky) for Buffett’s Berkshire Hathaway to consider but offer compelling growth prospects for those willing to take calculated risks.

1. Butterfly Network (BFLY): Revolutionizing Healthcare with AI-Powered Ultrasound

Market Cap: $1.1 billion
Sector: Healthcare Technology

Butterfly Network is rewriting the rules of medical imaging with its handheld ultrasound devices, which integrate AI and smartphone apps to deliver high-resolution scans at a fraction of the cost of traditional machines. The company’s disruptive technology has already captured 35% year-over-year revenue growth in 2024, with projections of 20% for 2025.

Why It Fits Here:
- Too Small for Buffett: At $1.1 billion, BFLY’s market cap is a fraction of Berkshire’s typical $10 billion+ investments.
- Growth Drivers: The global ultrasound market is expected to hit $8.5 billion by 2028, and Butterfly’s AI-driven edge could cement its position as a leader.
- Acquisition Potential: Its niche innovation makes it a prime buyout candidate for larger medical device firms like GE Healthcare or Philips.

2. Innodata (INOD): Transitioning from IT Services to AI Powerhouse

Market Cap: $1.7 billion
Sector: Technology

Innodata is a textbook example of a company pivoting at the right time. Once focused on legacy IT services, it has shifted its focus to AI and data mining, achieving 90% organic revenue growth in 2024. Its AI platforms now serve industries from finance to healthcare, and the stock has surged 609% over the past year on investor optimism.

Why It Fits Here:
- Buffett’s Blind Spot: Buffett has historically avoided high-risk, high-growth tech stocks without proven profitability. INOD’s valuation and reliance on emerging AI applications make it a non-starter for his conservative style.
- Growth Catalysts: The global AI market is projected to grow at a 38% CAGR through 2030, and INOD’s early-mover advantage in niche data solutions positions it to capture share.

3. Liquidity Services (LQDT): The E-Commerce Disruptor in Asset Liquidation

Market Cap: $1.1 billion
Sector: Consumer Cyclical

Liquidity Services operates an eBay-like platform for businesses to liquidate surplus inventory—think construction equipment, government surplus, and more. With 35% revenue growth projected for 2025 and a fortress balance sheet ($139 million in cash, zero debt), LQDT is a hidden gem in a fragmented industry.

Why It Fits Here:
- Too Niche for Buffett: The asset liquidation market is obscure and volatile, lacking the scale or stability Buffett seeks.
- Sustainable Moat: Its platform’s scale and data-driven pricing algorithms create a barrier to entry, while demand for cost-effective liquidation solutions grows across industries.

Conclusion: Small-Cap Opportunities in a Volatile Market

These three stocks—Butterfly Network, Innodata, and Liquidity Services—represent the kind of high-growth, innovative companies that thrive in sectors too small or risky for Buffett’s Berkshire Hathaway. Each leverages a unique moat: BFLY’s AI-driven healthcare tech, INOD’s pivot to AI analytics, and LQDT’s e-commerce dominance in asset liquidation.

While small-cap investing carries risks—higher volatility, regulatory hurdles, and execution challenges—their valuation multiples and growth trajectories make them compelling buys. For instance, BFLY trades at a modest 10x forward revenue multiple, while INOD’s stock surge reflects investor confidence in its AI transition.

The Morningstar US Small-Mid Cap Moat Focus Index (SMID Moat Index), which tracks such firms, has outperformed broader benchmarks in 2025 despite market turbulence, rising 7% in November alone. Investors should consider these stocks as part of a diversified portfolio, pairing them with ETFs like the iShares Russell 2000 ETF (IWM) for broader small-cap exposure.

In a world where Buffett’s giants dominate headlines, it’s the nimble small caps—driven by innovation and niche dominance—that can deliver outsized returns. For those willing to look beyond the usual suspects, 2025 could be their year to shine.