Bring a large pot of water to boil. Once boiling, generously salt the water and return to a boil. Add pasta and cook according to package directions, subtracting 1 minute. Drain, shake off excess water, and immediately add pasta back to pot. Add butter and gently stir until butter is melted. Set aside to cool while making sauce. Preheat oven to 350°F.

Meanwhile, dice the bacon and cook over medium-high heat in a large, heavy-bottom pot until golden and cooked to desired preference. Use a slotted spoon to remove the bacon onto a paper-towel-lined plate. Drain all but 1 tablespoon of the grease.

Reduce heat to medium and add in diced jalapeños. Sauté for 1–2 minutes and add garlic, paprika, garlic powder, and onion powder. Season to taste with salt and pepper; sauté for 30 seconds or until fragrant.

Add butter, and once melted, add flour. Whisk constantly, cooking for 1 minute. While whisking, slowly pour in evaporated milk. Cook for 5–7 minutes or until thickened properly.

While sauce is thickening, add unwrapped cream cheese to the microwave. Microwave for 10 seconds, flip, and microwave for another 10 seconds. Flip and microwave once more or until very soft.

Add cream cheese to the sauce and briskly whisk until completely integrated and smooth. Remove pot from heat and add in Cheddar and pepper-Jack. Stir until smooth.

Optional: Meanwhile, melt butter over medium heat in a medium pan. Add panko and salt to taste and stir to coat. Continue cooking until crumbs become golden brown. Remove from heat and set aside.

Pour the sauce over cooked pasta. Add in reserved bacon. Give everything a quick stir and a taste test—add more salt/pepper if needed. Transfer mixture to a lightly greased 9x9-inch pan. Sprinkle panko topping evenly over pasta, and if desired, add a thinly sliced jalapeño on top.

Bake for 10–15 minutes or until slightly thickened at the edges and light golden brown on top. Remove and serve immediately.