Often overlooked, cloud technology is silently backing the next technological revolution

Those unfamiliar with the technology may think of the cloud as a place to store simple files, like Box or Google Drive. But, applied to startups and corporations working with myriad quantities and data types, effective cloud storage is the fuel for skyrocketing growth, said Ari Lightman, a Carnegie Mellon University professor of digital media and marketing with a background in high tech ventures.

Before the cloud, companies would likely need to invest millions of dollars in data storage infrastructure, including in-house servers—straining balance sheets and serving as a major barrier to entry for smaller ventures. With the cloud, companies are able to house varied and massive amounts of data offsite and save on costs. 

For example, a healthcare company working with varied data like health records, sensor data, and images would need to spend a large part of its budget and manpower on maintaining and storing those records, problems the cloud can help alleviate.

“For an organization to collect all that information, and to store it on premise is impossible. So rather, you have it all in the cloud, and then you do something where you have linkages to the data,” Lightman told Fortune. 

If a company requires more storage, it can quickly buy more, without the hassle associated with adding hard drives and servers.

The cloud’s role in powering AI

For the newest wave of technological progress, AI, the cloud continues to play a pivotal role with data storage and more, said Tomasz Tunguz, general partner at the AI-focused early stage venture capital firm Theory Ventures. 

“It’s been absolutely essential,” he told Fortune. “It’s not possible to have this AI wave without the large scale data centers, the access to GPUs, the data storage that’s associated with capturing all the data that’s basically compressed in these models, and then also the delivery.”

Companies such as OpenAI need massive amounts of compute and energy to run and continue developing LLMs such as ChatGPT. But, instead of owning the infrastructure needed to run such technology on-site, these companies pay cloud service providers to provide it to them.

The services cloud companies provide include storing the massive amount of data needed to train LLMs, providing compute power through rented GPUs to run the technology, and also helping LLM services be distributed across the world effectively by utilizing data centers located near customers, said Tunguz.

While some of the biggest companies in the world, Amazon, Microsoft, and Google, also own the biggest cloud providers—namely Amazon Web Services, Microsoft Azure, and Google Cloud—lesser known cloud companies are also seeing a boost in demand from AI.

As the demand for AI grows, so do cloud-related needs, in part because AI both requires massive amounts of data to function and then creates huge amounts of data from its operations, Gleb Budman, the CEO of cloud storage and data backup company Backblaze, told Fortune. (Disclosure: Fortune is a customer of Backblaze). 

While some customers may opt to both store their data and utilize the compute power and resources of a large cloud provider such as Amazon Web Services, Budman said increasingly customers are separating storage and compute between different companies. This trend has given cloud storage companies such as Backblaze a boost.

AI use cases were Backblaze’s number one driver of growth in the first quarter, said Budman. Its AI customer count shot up 66% year-over-year as of the first quarter, and the data stored by those companies with Backblaze grew by 25 times over the same period, he said.

Despite its importance, the cloud is often overlooked in larger tech conversations. 

“I think that as big as it is, people don’t fully grasp how critical it is to the pace of AI innovation and our daily life,” Budman said.