For no one is a Jew who is merely one outwardly...But a Jew is one inwardly...by the Spirit, not by the letter. His praise is not from man but from God.
Romans 2:28-29 ESV

The word Jew comes from Yehudah, which means "praised". He who has a circumcised heart is truly praised of God, not someone who is merely physically circumcised.

This doesn't mean that one born a Jew isn't really a Jew. Paul was speaking metaphorically, playing on the root meaning of Yehudah. He wasn't saying God had rejected the genetic descendants of either Jacob or Judah.