The temperamental 19-year-old has long been a target for Gunners' manager Arsene Wenger, who is looking to revamp his squad for another tilt at the Premier League title next season.
Wenger has already bolstered his forward line with the addition of Maroaune Chamakh from Bordeaux, with Nice frontman Loic Remy also believed to be a target.
And recent reports have suggested that the Emirates Stadium side are weighing up a £32 million swoop for both Balotelli and Palermo defender Simon Kjaer.
Balotelli, who hit the headlines after several squabbles with former manager Jose Mourinho last season, was in Milan on Tuesday morning to sit his college exams, but the question on everyone's lips was whether or not his future lies with the Nerazzuri.
"I dont know if i will stay at Inter, we will see," he told Sky Sport Italia.
But he could not contain his delight at being the subject of speculation linking him with a move to Arsenal, also hinting that Manchester City could be a possible destination.
"I'm happy that Arsenal likes me. Staying at Inter? Now let's see. Roberto Mancini? He gave me my debut in Serie A," Balotelli told reporters outside his school.
"I don't know if there has been contact, you have to ask my agent."
Balotelli's agent later played down his comments, revealing that new Inter boss Rafa Benitez sees him as part of his plans for next term.
Mino Raiola told Radio Radio TV: "I spoke with Inter, which has a project. I don't think Balotelli is on the market but I don't know if Inter want to let him play."
Balotelli has succeeded Antonio Cassano as the bad boy of Italian football.
The Inter forward’s short career has already stirred up more controversy then most players manage
