Melt butter in heavy medium skillet over medium-high heat.
Add both peppers, jalapeño, and garlic; sauté until peppers are tender, about 5 minutes.
Bring stock and cream to boil in heavy large saucepan.
Add grits in thin stream, whisking constantly.
Whisk until grits are cooked and mixture thickens, about 6 minutes.
Add sautéed pepper mixture and cheese; stir until cheese melts.
Season with salt and pepper.