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Kyuu said:
There isn't much MS can do at this point. They chose the CrossGen route which gives them the advantage of having a much larger player base to sell their games to, as well as those "pro-consumer" points their fanbase know and love. This comes at the expense of visually and maybe mechanically inferior early games to PS5's true exclusives, which may snowball into them lagging behind on the graphics front throughout the entire generation. The UE5 tech demo was the tip of the iceberg, not that I expect early Sony AAA games to match the level of what was shown in the demo, but I feel they won't be too far behind either.

MS can still put together a short playable true XSX tech demo, but the gap in quality between it and the actual XSX launch games would be pretty damn massive that casuals will call it fake.

If you want to compare you need to look at Apple to apple and this will be third-party games.  So in reality, in terms of graphics XSX will be ahead of PS5 running on both platforms. Until, the inevitable mid-gen refresh.

I like your last statement you made about MS, because who's really going to be held up to the quality of the UE5 demo? 
The reality is that Sony with the UE5 has set the bar for PS5, every game now needs to look like UE5 demo from day 1 and anything less will be a letdown. They promise true next-gen leap at the cost of pro-consumer offering to match Microsoft. Therefore, it's really Sony that needs to deliver on graphics since Microsoft can be forgiven because we are getting all the other amazing services.

Moore's law on computer power doesn't apply anymore and we shouldn't expect huge graphical leaps anymore compare to past generations. Besides, the best game of the last generation in my opinion is Breath of the Wild, the focus on graphics and power is not where you win mind share. Also, with the introduction of streaming service and where the gaming industry is going, most gamers won't experience the highest fidelity. XSX and PS5 should far out surpass what will be the norm in terms of expected graphics. Everyone is set to take part of streaming services including Sony. Until the technology improve every one will be streaming at 1080P.