Cook Pasta:
Bring a large pot of salted water to a boil. Cook macaroni according to package directions until al dente. Drain and set aside.
Cook Bacon and Jalapeños:
In a large skillet, cook chopped bacon until crisp. Remove with a slotted spoon and set aside. In the same skillet, sauté jalapeños for 1–2 minutes until slightly softened. Set aside with bacon.
Make the Cheese Sauce:
In a saucepan, melt butter over medium heat. Whisk in flour and cook for 1 minute. Gradually whisk in milk and cream. Bring to a gentle simmer and cook until slightly thickened, 3–4 minutes.
Add Cheese:
Reduce heat to low and stir in cheddar, Monterey Jack, salt, pepper, and smoked paprika. Stir until cheese is melted and sauce is smooth.
Assemble:
Add cooked pasta, bacon, and jalapeños to the cheese sauce. Mix to coat evenly. Transfer to a greased baking dish if baking.
Optional Topping and Bake:
Mix panko with 1 tablespoon melted butter and sprinkle over mac and cheese. Bake at 375°F (190°C) for 15–20 minutes until golden and bubbly.