* Reddit gains on OpenAI partnership

* GameStop expects Q1 revenue to drop, shares tumble

* AMD up as Microsoft offers AMD option to Nvidia AI processors

* Indexes mixed: Dow up 0.21%, S&P up 0.02%, Nasdaq down 0.16%

NEW YORK, May 17 (Reuters) - U.S. stocks were mixed in choppy trading on Friday on profit-taking after a weeks-long rally underpinned by data that supported expectations for interest rate cuts by the Federal Reserve this year.

The benchmark S&P 500 edged higher after paring losses while the Nasdaq fell, but both remained on course for a fourth straight week of gains. The Dow rose, on track for its fifth week of advances in a row.

Strong corporate results and inflation and other economic data have bolstered investor hopes for Fed rate cuts this year.

All three main indexes touched record highs on Thursday, when the Dow hit the 40,000 milestone before closing in the red.

"Today is a bit of a digestion day: we just broke out through record highs and now we're on a fourth straight week of gains, and the market appears to take a breaker," said Keith Lerner, co-chief investment officer at Truist Advisory Services in Atlanta.

Traders see a 68% chance of the Fed's first rate cut in September, the CME FedWatch Tool showed.

Seven out of the 11 S&P 500 sectors were advancing, with energy shares leading gainers while technology was the biggest loser.

Among technology heavyweights, Nvidia, which reports quarterly results next week, was down 2% while Alphabet was up 0.7%. Amazon rose 0.4%, Apple fell 0.1%, and Meta shed 0.7%.

At 02:56 p.m ET, the Dow Jones Industrial Average rose 84.38 points, or 0.21%, to 39,953.76. The S&P 500 gained 1.05 points, or 0.02%, at 5,298.15 and the Nasdaq Composite lost 27.57 points, or 0.16%, at 16,670.89.

"For all the times that I've seen the market hit milestones and new highs, there's almost always consolidation around it even though it seems it's all psychological," said Tom Plumb, chief executive and portfolio manager at Plumb Funds in New York.

"People have got mixed signals on inflation this week and the next big catalyst is next week when Nvidia reports. So it's one of those days when you seem to be bidding your time."

Advanced Micro Devices gained 0.1% after Microsoft said it plans to offer its cloud computing customers a platform of AMD artificial intelligence chips that will compete with components made by Nvidia.

Reddit rose 11.2% on partnering with OpenAI to bring its content to ChatGPT.

GameStop shed 24% after filing for a mixed-shelf offering and saying it expects first-quarter net sales to drop from a year ago.

The stock is still set for sharp weekly gains, along with fellow retail investor darling AMC Entertainment, on excitement over the social media return of "Roaring Kitty," the central figure in the 2021 meme-stock rally. AMC shares fell 4.4%.

Declining issues outnumbered advancers by a 1.01-to-1 ratio on the NYSE. On the Nasdaq, 1,898 stocks rose and 2,242 fell as declining issues outnumbered advancers by a 1.18-to-1 ratio.

The S&P 500 posted 39 new 52-week highs and one new low while the Nasdaq recorded 136 new highs and 59 new lows. (Reporting by Chibuike Oguh in New York; additional reporting by Bansari Mayur Kamdar and Shristi Achar A in Bengaluru; Editing by)