Arsenal have splashed big in the current transfer window, committing over £100million for Fabio Vieira, Gabriel Jesus and Oleksandr Zinchenko.
Arsenal are still keen on signing a winger and the club have identified Neto as a key target.
A move to north London for the Portugal international before the transfer window closes next week will be tricky, with Wolves potentially asking for up to £50m for Neto as he signs a new five-year deal years just in March.
Arsenal want to sign a new winger as club-record holder Nicolas Pepe is in talks with French side Nice over a loan deal.
Neto is seen as the perfect replacement for the Ivorian represented by super-agent Jorge Mendes, who brokered Vieira’s move from Porto to the Emirates earlier this summer.
Neto, who grew up as an Arsenal fan, was voted Wolves’ Player of the Season in the 2020-21 season.
He suffered a serious knee injury in April last year but made a comeback last season and has started Molineux’s current campaign regularly.