I'm also quite sure it's Smash. I don't think they set up Studio S for any other purpose, and with its establishment, especially around the time a Smash game would start development to launch relatively early in the lifespan of the Switch 2, any other option seems, to me, a long shot.
Smash is the kind of game Nintendo wants up front for its system. Not to mention a gradual shift to a steady content rollout that last several years means it will stay alive for most of the lifespan anyway.
And yeah there's the possibility it's being made without Sakurai, but... I highly doubt he'd opt out of working on Smash at this point. Gradually pass the reins to Studio S so eventually he can move on? Sure, but not yet.
I mean, you can tell from his Youtube videos, especially from the art & UI, that he's still working with the same people as those behind Bamco's Nintendo team page:
https://www.bandainamcostudios.com/special-studio/
I think he knew his next project after Ultimate would be Smash again, and he just took his year or so off to focus on the Youtube stuff.