The Gunners were keen on £22m-rated Brazilian midfielder Bernard from Atletico Mineiro.
But Brazil team-mate Hulk told the 20-year-old to join Porto instead.
Hulk used to play for the Portuguese giants and his advice appears to have left Arsenal empty-handed once again.
Bernard’s agent Adriano Spadotto added: “He would prefer to join a middling, but good club in Europe rather than risk joining an elite club like Arsenal and not getting much of a chance to play.
Arsenal have already failed to land Real Madrid striker Gonzalo Higuain when the Argentina striker moved to Napoli instead.
Another target Stevan Jovetic swapped Fiorentina for Manchester City this summer.