Short answer. No.
Long answer. It's complicated, but barring a major computer revolution, we could max out graphics in our lifetime.
First, the lack of noticeable difference between console and PC games these days. This video is the definitive explanation.
The TL:
DR, it used to be the difference between low and ultra was night and day, now games are targeted for medium settings (ie. consoles) and anything above that is just a bonus.
I'd add that video compression can destroy the finer details of a games graphics.
As for diminishing returns. That has been a complaint since games went 3D. Part of it is that being able to push higher resolutions and more frames has little benefit beyond a certain point. I still play on PC at 60fps 1080p just fine. There's also the not-so-secret that PC games are often nerfed graphically so console peasants don't feel like they're missing out.
In theory CGI could be 100% realistic, and in theory computer games just have to be fast enough to make that render many times a second. In practice, you have things
@ZMOT mentioned with assets and animations being a limiting factor. People often underestimate how much work goes into a game, and how much effort goes into getting games to look good, run well, and play well.
However, in the Joe Rogan interview with John Carmack, Carmack mentioned in the next 20 years cpu's will be so small they can't get any smaller due to the physical properties of the universe, and unless there's an unforeseen breakthrough in quantum computing or some other computer tech, it will be the end of Moore's law. What would that mean for the computer industry? I don't know. Maybe console makers would agree on a standard once that happens.
Finally, there's another problem when it comes to "graphics" and that's storage. All these super high res textures and models have to be put somewhere, and with games frequently creeping above 100gb, there's going to have to be advances in storage, compression, decompression, etc. to make these super realistic graphics you crave work. To double the texture resolution, you have to quadruple the size of the file. (1x1 = 1, 2x2 = 4, 4x4 = 16). People are angry when a game is 100gb, imagine the rage if a game was 1.6tb.