It's never too late for AC Milan to compete for the Scudetto because Milan will not be doubted or underestimated it's just that some against big teams always end in a draw and it's difficult to win that's all, the same points with Napoli can catch up at any time while their mentality strong this season, if you can beat Inter of course there is still hope for the Scudetto trophy.
I don't say it is too late or impossible for AC Milan. They can do it and win their first Scudetto after many years, just like Inter Milan in the previous season. They have more reasons to win this fight because their main opponent is Inter Milan. They are in a derby for Scudetto, for the first seasons after many years. Napoli can be temporary opponent for both teams but I believe Napoli don't have enough stability so this competition will be mainly between Inter Milan and AC Milan
Milan is a big team in Italy but i dont think they have a quality to push until the rest of the season to win the title. You need to win 90% of the remaining games or more to win the title and i dont see Milan winning most of them. They will be fighting in the end for the champions league spot.
If Inter Milan can beat Juventus in the past season and take the Scudetto, AC Milan can beat Inter Milan and take the Scudetto in this season. They are not very different regarding to quality. Results and their ranks, total points on the table show it too. AC Milan are not leading team and they must work harder than Inter Milan to take over the first position but they can do it.