Palmer, 19, was making his 11th senior appearance of the season in the dominant win, and it was by far his most impressive yet.
Assisting Bernardo Silva's opener with some excellent dribbling, the versatile forward later capped off the victory with a sublime tight-angle finish.
City's stand-in manager on the night, Rodolfo Borrell described Palmer as a 'huge talent' post-match, with the Wythenshawe-born youngster looking set to become a first-team regular.
talkSPORT host Dean Saunders agreed, running through what makes the England youth international so special.
"Last night I thought 'he is a player'," Saunders said.
"I looked at him and thought, he's quick, he's coming inside and shooting with his left foot, he's crossing it with his right foot.
"His decision making around the box when he's playing with top players, his brain had to be on the same level as them, he was passing and moving and picking the right options out.
"It just looked to me as if this boy can fit in any team."
Palmer broke into City's first team last season with a pair of appearances in League Cup and Champions League.
This season, his total is already at 11 games, with three goals in total, scoring his first for the side in a cup win over Wycombe.
Manager Pep Guardiola has been applauded for bringing through young talent such as England international Phil Foden, and Saunders believes Palmer is on the same path.
"For every Phil Foden there's been 10, 12 players who never got a look in," he said. "This is why the FA Cup's good and the League Cup at the moment.
"The English players, for the future, they're not getting much of a look in at the big clubs, but last night was a great hope for everybody in England seeing him play."
Borrell, City's manager in the absence of Covid-19 positive Guardiola, had similarly high praise for the youngster.
"He is a huge talent, there's no secret," he said.
"Everybody has been able to see tonight. At the end of the day, he is training with us on a daily basis.
"It is difficult sometimes to give him more minutes because you know the level of competition in this squad so it is not easy but it is about being patient, still working hard and when he performs to use this kind of opportunity to show the talent that he is and show that in a consistent basis.
"But obviously, huge huge quality and great potential and great for us as a club and him as a player."