Sort of. The part about diminishing returns is arguably true, but hardware didn't stagnated.
What happened is that _software_ stopped bloating and inflating like a balloon, as was the norm through the '80s, '90s and early '00s.
When a Microsoft OS requires _less_ resources than it's predecessors (like early Win7 compared to early Vista), you know upgrade cycles will be much longer than before.
Unless you're handling high definition video or playing AAA games, of course. But for any other "mundane" task, the only reason to upgrade from a 5 or 6 years old machine would be an un-repairable hardware malfunction.