Video game graphics already look good enough. They have for the better part of the last decade and we are at the point of diminishing returns. Imo, the thing that AAA studios should be focusing more effort on is physics simulation. That will help the game worlds feel much more immersive, by exponential amounts. I want to see reactive water, cloth, dirt, sand, trees, grass, everything.
Definitely going too hard on graphics and graphics adjacent technology. Ray tracing is a neat idea, it's not worth the franky insane amount of time, effort, and compute power that perfecting it seems to demand.
Like I said, the PS3/4/5 have power differences, but it's really not that noticeable in a lot of cases. Genre depending.
Graphics are the bottom rung of game design importance. Dorf Fortress doesn't even have any by default and it's an insanely deep game with a fairly large and devoted fanbase. It's more important to have a good game than it is to have good graphics.
Graphics don't even sell games anymore, the indie boom has repopularized the retro aesthetic (though there's the question of how much of that is just the desire for games to return to being passion projects meant to fund the next game rather than profit driven cash grabs meant to appeal to the maximum amount of wallets)