Storage has become a critical component of enterprise AI workflows as organizations increasingly deploy AI models and inference at scale. To speed deployment and simplify access, many enterprises are shifting storage workloads to the cloud, opening the door for a growing group of specialized cloud storage providers to challenge the hyperscalers.

These providers offer S3-compatible object storage for structured and unstructured data, allowing integration with services from AWS, Microsoft, Google, and Oracle while competing directly on cost. By significantly undercutting hyperscaler pricing—and often eliminating data egress fees—companies such as Wasabi and Backblaze are attracting customers building data-intensive AI applications.

Wasabi this week announced $70 million in new funding, valuing the company at $1.8 billion and bringing its total capital raised to $600 million. The round was led by L2 Point Management, with participation from Pure Storage and existing investors including Fidelity. Wasabi says it serves more than 100,000 customers globally, offering S3-compatible storage at $6.99 per terabyte per month with no egress fees.

Backblaze reported similar momentum in its third-quarter 2025 earnings, citing 28% year-over-year growth in its B2 object storage service and adoption by more than 100,000 customers. The service costs $6 per terabyte per month with no egress fees, and the company recently introduced B2 Overdrive, a high-throughput option designed for AI and HPC workloads.

By comparison, hyperscalers typically charge higher base rates for object storage along with additional fees for data operations and egress. While AWS, Azure, and Google Cloud offer extensive integration, compliance certifications, and policy-based data management tools, their pricing complexity and costs have pushed some enterprises to explore alternatives.

The market is also expanding beyond Wasabi and Backblaze, with providers such as CoreWeave, Storj, DigitalOcean, OVHcloud, Vultr, and Impossible Cloud offering S3-compatible services with varying pricing, performance tiers, and regulatory features. European providers, in particular, are emphasizing data sovereignty and GDPR compliance as key differentiators.

As AI workloads continue to grow, cloud storage is becoming a strategic battleground. While hyperscalers retain advantages in ecosystem depth and enterprise services, specialized storage providers are gaining traction by combining lower costs with cloud compatibility—signaling a more competitive and diversified storage landscape ahead.