Ancelotti feels both teams have plenty of potential.
He said: "It will be up to Massimiliano Allegri to sort out Milan after their latest buys. But the Champions League is in the DNA of that club and we shouldn't forget it.
"Juventus could surprise in Europe. They have a game plan which is based on speed and intensity. But they also won last season because they only had one tournament to focus on. It will be different with the Champions League.
"I got to know Agnelli when I was at Juventus and I knew he would become a great club director."