Real Madrid is really much better than last year and they have players who can be UCL champions, in addition to having an excellent coach.
However, we have to remember that their rivals in the Spanish league are not doing very well, Barcelona is restructuring and Atletico Madrid, despite qualifying in the UCL, eliminating Manchester United away from home, is not having a great season either.
Against PSG, Real Madrid reappeared in the second half in the decisive game, before coming very badly. So, they can indeed become the UCL champions, but right now, this role of super favorite is not for them.