Step 1

Preheat oven to 350 degrees F (175 degrees C). Butter a 9x12-inch baking dish.

Step 2

Bring milk, water, and salt to a boil in a large saucepan; gradually sprinkle grits into the boiling liquid, stirring to combine. Cook until thickened, about 5 minutes.

Step 3

Stir processed cheese, sharp Cheddar cheese, butter, and garlic powder into grits, stirring until cheese has melted. Let the mixture stand until cooled, about 15 minutes. Stir beaten eggs into grits; transfer to prepared baking dish.

Step 4

Bake in the preheated oven until the top is lightly golden brown and the grits are set, about 45 minutes.