The AI will try to target the ninja with the lowest hp so if you have a Kakashi expect the enemy's AI to target him. If the current target dies while a ninja is waiting to cast his mystery it will target something random most of the time clones.

The AI can be good with interrupts and some teams work with the Ai but most have a hard time if you use the AI.

If you can I would always play in manual and only use the ai if you need to go afk on a easy fight.