I doubt it's a VRAM issue. Avatar stutters on the Ally X. Outlaws has the same always-on ray tracing. Both are just too heavy for todays iGPUs. Hopefully the ROG Ally 2 comes with RDNA 4 graphics.
I think both these games or at least Avatar use ray tracing through shaders, so it’s not HW RT it’s software RT which is also less effective (at least in Avatar). And the next ROG Ally will 100% have at least RDNA 3.5 if not 4 (and 3.5 already has the way better RT cores), Asians are quick to adopt new hardware.
edit, from the tpu Avatar Review:
“Unlike other games, which use ray tracing as additional "beyond ultra" settings option, this next-gen version of the Snowdrop Engine relies on ray tracing at all quality levels. Interestingly, they are not using the typical ray tracing that we know from recent games, but a more hybrid approach that's similar to what Unreal Engine 5 does. Ray tracing is used for lighting, reflections and shadows (sun shadows only). Each of those effects has a software shader fallback, to ensure the game will run correctly on older hardware, too.”
edit 2:
I have checked both games now again, they both use a hybrid shader/hardware RT mix (probably low or no hardware RT core usage), that’s why it’s not running well on the handheld gaming consoles with weaker GPUs, they only have 512/768 shaders that’s simply not enough. While it’s still unsure how much of it is hardware raytracing I would say it’s on the low side (or fully software) or else the 4080 would be far ahead of the 7900XTX and not just 10-15%.
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Its the story of Ubisoft's life.