You know this how? They've been getting a lot of Sony talent from SSM and Naughty Dog, and investing in tons of 1st party. And at least so far in terms of best graphical showcases of next-gen I'd say they're at least even with Sony, as for me those picks would be:
-Hellblade 2 trailer (XSX): In-engine, strong visuals and fantastic facial animations. Not impossible for final game to reach these visuals
-Project Mara (XSX): Still arguably the best demonstration of RT so far (alongside BMI). In-engine teaser, small scale as confirmed by NT so expecting final game to match visuals seen here if not even better.
-UE5 demo (PS5): In-engine demonstration, no real game based on it though. Fantastic texture quality and fast-scale streaming of assets, great use of software-based RT techniques. Keep in mind there was almost no actual "game" logic happening, though.
-Bright Memory Infinite (XSX): In-engine with some legit gameplay segments in there. Arguably best demonstration of RT along with Project Mara seen so far. Great atmospheric dust and smoke effects to sell rough weather.
-Ratchet & Clank (PS5): Lots of gameplay, tons of particle and object effects, seamless world hopping. One of the standouts of PS5 event.
-HZD2 (PS5): Some possible gameplay, at very least in-engine. High texture quality, nice use of color, great details. The other standout of the PS5 event.
Next gen is not going to play out nearly to the same degree this gen did when it comes to the rather lopsided nature of 1st-party initiatives between MS and Sony after the first couple of years IMHO, and that's a good thing for all gamers.