A win would have taken Arsene Wenger's side above leaders Leicester City who lost only their second game of the season, 1-0 at Liverpool.
But goals from Cuco Martina, Jose Fonte and a Shane Long double saw the usual questions being asked of Arsenal's title bottle as they go in search of a first Premier League crown in 12 years.
That's despite Wenger's men being six points better off this season than they were at the same stage of the last campaign in this most wide open of Premier League title races.
As the record goalscorer in Premier League history, Shearer's views carry a lot of weight.
'This is what has cost them over the years'
And the BBC pundit, who scored 313 goals in 622 career games for club and country, pulled no punches analysing the game - and the Gunners' title credentials - on Match of the Day.
"They'll never, ever have a better chance of winning the title than this season," Shearer said on MOTD.
"Everyone else has gone backwards.
"But a performance like this is all too familiar when it really matters with Arsenal.
"Arsenal are capable of a performance like this and this is what has cost them over the years.
"They need to eradicate performances like that and they'll have a chance."
Whether defeat at St Mary’s is just another three points dropped by one of the title hopefuls in this topsy turvy season or much worse for the North Londoners only time will tell.
The Gunners are missing arguably their best three players but it was the same team that dominated their main rivals Manchester City less than a week ago.
The fact it was a Boxing Day game, with the festive period notoriously throwing up freak results, should also be taken into consideration.
While many bemoan the glut of fixtures at this time of year, at least it means Arsenal have a chance to put things right against Bournemouth later today.