After cruising to a 4-0 victory against Chelsea in the FA Cup on Sunday, the Citizens were second best against the Saints at St Mary's and failed to register a single shot on target throughout the 90 minutes for the first time since April 2018.
First-half goals from Sekou Mara and Moussa Djenepo ultimately condemned City to defeat, with Guardiola losing his first-ever domestic cup quarter-final tie as a manager after winning each of his previous 15 matches at this stage.
Guardiola has since reflected on City's "bad night" on the South coast, telling BBC Radio 5 Live: "The better team won. We didn't play good, we didn't play well in the beginning. There are many games you can start not good and overcome and we didn't do it.
"When you are not prepared to play this game you arrive one inch late and don't score a goal. When you are prepared you score the goal.
"Today was a bad night, the opponent was better so we have to congratulate them. To win games you have to deserve it and tonight we didn't deserve it."
Guardiola has also fired a warning to his Man City squad ahead of Saturday's Premier League derby against rivals Manchester United, stating that his side will have 'no chance' of beating the Red Devils if they repeat their performance against Southampton.
"A different competition, of course if we perform in this way we don't have a chance," Guardiola told reporters as quoted by the Manchester Evening News.
"I know the moment they have. Many years they're looking forward to stay in this position. We know exactly what to do to play better and we're going to try to do it."
Meanwhile, Man City captain Ilkay Gundogan has urged his teammates to bounce back from their "very disappointing" defeat against the Saints.
"It's definitely not what we wanted. We had hopes of going through in the Carabao Cup but with that performance there was no chance. It was not enough from us," Gundogan told mancity.com.
"There are a few things, a few things against the ball,we were not aggressive enough, not winning duels, giving them opportunities to play. With the ball we made a lot of mistakes, missed a lot of passes, gave them the ball too easily and that resulted in the two goals.
"Today we were not good enough to create chances, not good enough to score a goal. The mix of the performance from all the team gives this result.
"Especially before the derby it's not an easy one to take, we need to get back on our route, to be humble and work hard, hopefully we can do it better next game."
Gundogan added: "It's never easy for the confidence to lose a game before such a big derby. We go to Old Trafford, we know we've done well there in recent years.
"It feels like this United side is probably stronger than ever, or especially in the recent past. They are full of confidence, they will play good football and we will need a much better performance than today."
Man City, who sit second in the Premier League table and five points behind leaders Arsenal, now have less than 72 hours to prepare for their Old Trafford showdown with Man United, who have won all six matches in all competitions since the World Cup break.