I kind of doubt we’ll get full PS5-level power in a handheld in any reasonable timeframe, but what’s more likely is something like the power needed to run PS5-level games at the Deck’s resolution. The Deck already has the same CPU and GPU architecture as the current consoles, just smaller and with lower power budget, so a couple of generations of chip advancements should hopefully give enough of a boost to come into the ballpark.

It’s intentionally vague. The point is that they’re waiting for something they feel validates releasing a new model that exposes a different performance target.

Although the Deck is just a PC, Valve is treating it much like a console. They do want developers to give it consideration and target it to ensure that their games can run well on it. The last thing you want to do when trying to court dev support is rug pull mid-development, and games can sometimes take years to make.

The long and short is that they’re just refusing to follow in the steps of an Aya or similar that just releases a new model whenever there’s something new to put in it, even if it’s only marginally better than what was there before. When they release a new Deck it will be transformative, not iterative.

As for what that might look like, no, it won’t have PS5 levels of performance. That’s just not rational. The PS5 draws like 200W, the Steam Deck APU draws 15W. It’s an entirely different class of product. However, it could potentially provide PS5 class visuals at a much lower resolution. Games on the PS5 target 4K with generally 1440p or higher render resolution. Getting the same quality (probably with ray tracing) at 720p or 800p upscaled to 1080p/1200p might be doable with whatever mobile APU AMD is shipping in a few years time.