Mix ground chicken, plain breadcrumbs, milk, salt, garlic powder and pepper just until combined. Shape into 20 small flattened nuggets about 1/2 inch thick and refrigerate for 15 minutes; this chilling is included in prep time.
Put flour in one shallow bowl, beat egg with water in a second and put panko in a third. Coat nuggets lightly in flour, egg and panko.
Preheat a 6-quart air fryer to 390°F for 3 minutes. Dab nuggets with oil and arrange half in the basket without touching.
Air fry for 5 minutes, turn carefully and cook for 5 to 7 minutes more until golden and at least 165°F in the centers. Transfer to a rack and repeat with the remaining nuggets.
Rest the final batch for 3 minutes and serve 5 nuggets per person.