Or should they wait until next gen?

Depends on how long they keep going this gen, I guess.

Did I miss the part where Nintendo wasn't also doing that with games like Bayonetta 3? Ocotpath Traveler, Mario + Rabbids, SMTV and more? Nintendo and Sony are both killing it. MS tried with PUBG.

Nintendo bought SMT and Octopath?

If they're smart they try to found or buy and expand studios now and start development on next gen titles already, including VR, so the'll be ready and prepared when next gen starts.

When was this announced?

http://www.pushsquare.com/news/2017/11/microsoft_may_bring_first-party_franchises_to_playstation_in_the_future

Sony has been building and fostering studios for decades now. MS can't match that level of talent just by throwing a few dev teams together. Naughty Dog, Guerrilla, Sucker Punch, and Insomniac have people with over ten years experience making games that average 85+ on Metacritic.

What MS should do is try to get more of the Japanese 3rd party support that comes to PC/PS4, but not XB1.

I think it's too late for them in this gen. Sure, they can open a lot of new studios, but games, especially AAA, take time to make, and they can't just build talent overnight either, it needs time to flourish. 

I'd rather they just focus on making their own games next gen, rather than buying up existing IP's and studios, while locking them to a single console and OS.