With finances at the club tight, Sherwood feels Arteta may have to call on the youth system more often next season.
Sherwood said, "He wants to try and get the best out of the squad he has," Sherwood added. "I like what he's doing there. I think they've got a clear plan. They haven't got the money.
"Nicolas Pepe was big money and he's the last of the big signings you'll see at Arsenal. They'll have to cut their cloth differently now and I think they'll dip into their academy.
"I think it'll take time but I think they'll get what they want to achieve under Mikel Arteta."