Combine chicken and cream cheese in a multi-functional pressure cooker (such as Instant Pot). Sprinkle with ranch seasoning and add water. Close and lock the lid. Select high pressure according to manufacturer's instructions; set timer for 15 minutes. Allow 10 to 15 minutes for pressure to build.

Release pressure carefully using the quick-release method according to manufacturer's instructions, about 5 minutes. Unlock and remove the lid.

Remove chicken and shred using 2 forks; return chicken to pot. Select low heat according to according to manufacturer's instructions. Add Cheddar cheese and bacon. Stir to combine and heat through, 2 to 3 minutes.