Arsene Wenger's young Gunners face another stern test of their title credentials against City, whose owners have bankrolled an unprecedented spending spree in an attempt to become the dominant force in the Barclays Premier League.
The extraordinary investment appears to be paying off this season, as Roberto Mancini's men headed into the weekend's fixtures just two points behind leaders Chelsea, three in front of Arsenal.
However, Walcott - fit again after suffering ankle ligament damage while on international duty for England against Switzerland in September - feels the Gunners can use the momentum from their midweek 5-1 Champions League demolition of Shakhtar Donetsk to get a result against the Blues.
"Man City have some fantastic players, but we have just to take the positives from the Shakhtar game and I am sure we will be fine," said Walcott, who made a 20-minute cameo against the Ukrainians on Tuesday night.
"They are starting to gel now and so only time will tell where they can be.
"Beating Chelsea at their place shows City are very strong, and against Blackpool they showed that they can grind out a result.
"Hopefully, though, we can stutter their season and try to get a win for us."
Walcott added: "What is good for the Premier League is that you really do not know what is going to happen every week.
"It is very open now and is going to be very tight this season.
"We are only five points behind.
"We always want to be part of the title race and to be on that podium at the end of the season."
Walcott has been plagued by a succession of injury set-backs, which arguably cost him a place in the World Cup squad.
However, the 21-year-old is not going to let it play on his mind as he looks to terrorise defenders with his pace.
"I am a player who gets kicked all the time, so I just have to get up from it and move on. That is all you can do," said Walcott, who netted a hat-trick in the 6-0 win over Blackpool at Emirates Stadium during August.
"Hopefully through training I can get back to the physical side of things with my ankle - I have only been whacked on it once so probably need a couple more just to make sure it is OK.
"I am sure I will take a few whacks and bruises, but I am sure I will be fine."