As SARS-CoV-2 continues to spread worldwide, tractable primary airway cell models that 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 (ACE2-OE) 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. Interferon-lambda was upregulated in cells with low-level infection while the NF-kB inhibitor alpha gene (encoding IkBa) was consistently upregulated in infected cells, and its expression positively correlated with infection levels. Confocal microscopy showed more IkBa expression in infected than bystander cells, but found concurrent nuclear translocation of NF-kB that IkBa usually prevents. Overexpressing a nondegradable IkBa mutant reduced NF-kB translocation and increased viral infection. These data demonstrate the functionality of ACE2-OE organoids in SARS-CoV-2 research and underscore that the strength of the NF-kB feedback loop in infected cells controls viral replication.