The Sun says Arsenal scouts watched the Italian youngster in action in Inter’s 5-0 win at Genoa last weekend.
The 19-year-old is highly regarded by Inter boss Jose Mourinho and could be expensive for the Gunners.
But Balotelli is still behind Gabriel Milito, Samuel Eto’o and David Suazo in the pecking order at the club.
Reports says Balotelli woul dbe willing to consider a move to the Premier League in January in order to get more regular first-team action.