The England forward was carried off an stretcher in the first-half of Thursday’s goalless draw with Sporting Lisbon in the Europa League.
Welbeck fell awkwardly on his ankle after challenging for a high ball and had to be given oxygen as he left the pitch in horrific scenes at the Emirates.
The 27-year-old was rushed to hospital where the club have said he is still receiving treatment.
“Danny remains in hospital and will continue to be assessed,” the club said via their official website.
“A further update will be issued over the next 72 hours.”
The full extent of his injury is not yet known but it is described as a “significant ankle injury” on arsenal.com.
His team-mates were quick to rally around him with messages of support.
Centre-back Rob Holding said he thinks Welbeck can come back as strong as ever, while manager Unai Emery took to Twitter to wish him well.
“He’s been so unlucky with injuries over the past few years but he’s a good character and got a good set of lads around him,” Holding said
“So we’ll lift him up and get him back as soon as we can. He can come back strong.”
Emery, whose side host Wolves in the Premier League on Sunday, added: “One more big reason to fight and win next Sunday.
“All the @Arsenal with you. Hope to see your smile and energy soon, Danny!”
Arsenal’s players were visibly shaken by the incident that took place midway through the first half.
Emery admitted they were struggling after the injury but hopes they can rally around and put in a god display on Sunday.
“This is the worst news tonight,” Emery said after the game.
“We think it’s serious. He was working well, doing a good match. He had chances.
“His injury also affected the mentality of the players. They saw it was a big injury.
“When you are playing football, playing competitive matches, it can happen. We don’t want that but this is our profession.”