There are plenty of people who are born overseas to American mothers. They are considered Americans themselves. I knew plenty of people like that overseas, when I grew up. Sometimes they had the option of dual citizenship if born in another country, but they were automatically given citizenship of the U.S. because it was the mother’s country of citizenship. So, if this is indeed Cruz’s situation, I don’t see how this should disqualify him - unless he was given Canadian citizenship exclusively, upon birth.
They are American citizens for sure. But they are NOT natural born citizens, which requires two parents who are both American citizens at the time of birth and the birth must occur withing the United States or a territory under its control.