According to The Sun, Napoli would prefer to sign Grealish. However, they know Garnacho would be a better investment as he is younger and has a higher ceiling than Grealish, who is nearing the end of his career at the highest level.
The England winger appears set to leave the Etihad Stadium this summer after being axed by Pep Guardiola and left out of the Club World Cup squad in recent weeks.
Reports suggest that Garnacho would prefer to stay in the Premier League after being deemed surplus to requirements by manager Ruben Amorim, but a move to the Serie A could be exactly what he needs to recharge his career.
Grealish, meanwhile, remains under contract with City until 2027, but Guardiola recently revealed that he may not get many opportunities for minutes if he does stay past the summer.
"Of course, Jack has to play," the Spaniard said.
"That's the truth. Jack is an unbelievable player that has to play football every three days. And it didn't happen this season, and last season neither. And he needs to do it with us, or another place.
"But that is a question for Jack, his agent, and the club. If he stays, we'll be fine, and he'll fight like he fought since day one to make a contribution."
The biggest problem with Grealish, however, is his £ 300,000-a-week wages that Napoli will not be able to match.
City may have to consider a loan and pay more than half of what Grealish earns to make the move work, or the Italian giants will opt for Garnacho, who earns considerably less on £50,000 per week.