This is not a completely correct conclusion, because without Cole Palmer Manchester City is still a strong team but that doesn't mean they can't be beaten and it is proven that Arsenal can only win with a very narrow score meaning this is a very even match but one chance is enough to make Arsenal win, and the goal is scored in the final minutes of the match so that a team no matter how strong will face difficulty in scoring a goal to get a draw with very little time remaining.
I am quite sure that Manchester City has accepted this defeat and will recover in the next match because they are one of the teams that recover quickly enough, and the two consecutive defeats that City in an English Premier League match will not immediately turn them into a weak team, and actually their next opponents have to be quite careful because Pep Guardiola will probably change the strategy that will make City even stronger and more productive.