Turn on the Instant Pot to Saute, and increase heat to More. Heat the oil in the bottom of the pot and add bacon (if using). Cook until starting to brown and crisp.
Add the onion and garlic, and saute until the onion begins to go translucent. Deglaze the pot with the broth, scraping any bits off the bottom. Turn off the Saute function.
Add the garlic powder, onion powder, salt, pepper, and potatoes. Stir gently to mix in spices.
Put the lid on the Instant Pot, turn the knob to Sealing, and set to High Pressure for two minutes. For thinner potatoes reduce time to one minute.
When time is up, do a quick release. When venting is complete, remove the lid and transfer the potatoes to an oven-safe pan (approx 8x8 inches) using a slotted spoon. Leave the liquid in the bottom of the Instant Pot. Preheat the oven broiler.
Turn the Instant Pot to Normal Saute mode. To the reserved liquid, add 1 1/2 cups of the cheese, the cream, and the nutmeg. Heat and stir until cheese is melted and combined.
Pour the sauce over the potatoes, making sure they are all coated. Top with remaining cup of cheese. Broil for approximately 2-5 minutes, until cheese is bubbling and golden. Keep an eye on it as it could quickly burn. Remove from oven and enjoy!