If someone compliments you, and you want to respond with the same compliment, Is it grammatically incorrect to say “As are you my friend."
It depends on exactly how the compliment is phrased. If they say 'you are [adjective/noun/whatever]' then yes it is correct. So: You are really kind! As are you! :-)
But if somebody say something like 'I really like you', it wouldn't work, because 'as are you' basically means 'you are as well/too'. So a response to 'I really like you' could be 'likewise!'(slightly more formal) or 'same to you!' (a bit less formal).
The one thing I would say is that 'as are you sounds' a little elevated, and I would say 'so are you' sounds a bit more natural.