As SARS-CoV-2 continues to spread worldwide, tractable primary airway cell models that accurately recapitulate the cell-intrinsic response to arising viral variants are needed. Here we describe an adult stem cell-derived human airway organoid model overexpressing the ACE2 receptor that supports robust viral replication while maintaining 3D architecture and cellular diversity of the airway epithelium. ACE2-OE organoids were infected with SARS-CoV-2 variants and subjected to single-cell RNA-sequencing. NF-κB inhibitor alpha was consistently upregulated in infected epithelial cells, and its mRNA expression positively correlated with infection levels. Confocal microscopy showed more IκBα expression in infected than bystander cells, but found concurrent nuclear translocation of NF-κB that IκBα usually prevents. Overexpressing a nondegradable IκBα mutant reduced NF-κB translocation and increased viral infection. These data demonstrate the functionality of ACE2-OE organoids in SARS-CoV-2 research and identify an incomplete NF-κB feedback loop as a rheostat of viral infection that may promote inflammation and severe disease.