Shares in Marvell Technology and Lumentum Holdings fell sharply after the two companies agreed a $115 billion merger, one of the biggest technology deals on record.
Marvell, the US chip designer, will buy Lumentum, which makes lasers and optical components for data centres, in an all-stock deal.
Marvell shares fell more than 5% in New York trading, while Lumentum dropped almost 10%, despite the offer valuing its shares at a premium.
The fall follows a sharp sell-off in artificial intelligence (AI) stocks last week, as investors questioned the scale of spending on AI infrastructure.
Marvell will issue 4.5 of its own shares for each Lumentum share, worth about $1,132 when the terms were set.
That was a 23.9% premium to Lumentum's closing price on 28 October.
The $115 billion valuation includes debt, with Lumentum's equity valued at about $102.5 billion.
Marvell shareholders will own about 67% of the combined company.
Lumentum's products carry data between servers, graphics processors and switches using light rather than electrical signals.
The companies said AI data centres were shifting from copper cables to optical connections as they grow larger and need to move more data at higher speeds.
Matt Murphy, Marvell's chief executive, described it as a once-in-a-generation opportunity.
He said the companies that moved first would set the standard for decades.
The combined group will be better placed to compete with Broadcom, its larger rival.
The companies expect to make more than $1 billion a year in cost savings.
Both boards have approved the deal, which is expected to complete in the first half of 2028, subject to approval by shareholders and regulators.
