The win at the Santiago Bernabeu earned Real Madrid a 6-3 aggregate victory against Manchester City and a place in the last 16.
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Arsenal are now 14 games unbeaten in the league and have 50 points from 24 games with leaders Liverpool on 56 from 23.
The comprehensive win moved Man City to 38 points and into fourth position on goal difference ahead of Newcastle United.
City twice came from behind to pick a point at Selhurst Park, but the champions have now won only once in six league games.
This marks the first time in Pep Guardiola’s dazzling managerial career that he has lost five games in a row across all competitions.
Antoine Semenyo and Evanilson scored for the Cherries who claimed their first ever win over the visitors.
Erling Haaland back-heeled home a stunning strike, the first of two goals on the night for Manchester City’s goal-scoring machine.
The Citizens have not brought in any major players to replenish their title winning squad.However, that may be about to change, according to The Standard this week.
But manager Pep Guardiola says his side need no extra motivation when they face Manchester United at Wembley.
Josko Gvardiol and Erling Haaland were on target for the defending champions in the match played on Sunday.
Arsenal have 77 points from 34 games with Liverpool, who face Everton on Wednesday, on 74 from 33
City looked on course to meet Bayern Munich in the semi-final when Luka Modric missed Real’s first penalty
With seven games remaining City are on 70 points – the same as the Reds, who visit Manchester United on Sunday, but behind them on goal difference.
Marcus Rashford’s eighth-minute thunderbolt gave United the lead against the run of play and it looked like the visitors might put a dent in City’s hopes of a fourth successive crown.
The Fourth Round of the FA Cup and other games are set to broadcast live on GOtv over the weekend.
Goals by Rodri and Julian Alvarez in each half barely did justice to City’s dominance as they enjoyed 84 percent possession in a routine win that at times resembled a training session.
Third-placed Arsenal’s unbeaten start came to a bitter end though as they went down to a controversial 1-0 defeat at Newcastle United which led to a furious outburst by manager Mikel Arteta.
City claimed the Club of the Year award at the Ballon d’Or ceremony in 2022 and this latest prestigious prize comes in the wake of what proved an historic and record-breaking 2022/23 campaign that saw Pep Guardiola’s side claim the Treble.
Further goals would not have flattered them, with the left-flank work of Jack Grealish and Bernardo Silva particularly fruitful
Arsenal ended a 12-game Premier League losing streak against a tepid Manchester City side with a well-deserved 1-0 victory in front of an ecstatic Emirates crowd on Sunday afternoon.