Is there any such thing as a bad sounding DAC these days?

Most all DACs over say $250 sound "good". Some are better than others - duh! There are lots of engineering variables (quality of power supplies, analog output sections, etc.) involved for sure to meet price points. And generally, the higher up the food chain you go, the better the sound, at least incrementally (some say you notice it most in the attack and decay of sounds, how long they linger and how natural tones are). But we do live in great times. Compared to the old DACs inside CD players of the 1980s and A/V receivers of the 1990s, we have come a long way. The glass is more than half-full. We are lucky.

Mostly agree with you and I am an analogue diehard. 
 

DACs released after about 2015 sound quite good with modern digital recordings. 
 

What still does not sound good even on modern DACs are early ADC conversion of analogue tape to digital. My music on pure analogue records pressed before 1980s (and many pure analogue records after 1980s but diminishing numbers) still sound way better than they do with modern DACs. I think a lot of that is due to immature ADCs used in the mass conversions of analogue tapes. 
 

here are some of the distortions that have been tackled by the latest gen of DACs. 
 

Common DAC Distortions caused by DAC digital conversion electronics Corrected Over the Last Two Decades:

1. Gain Riding (Gain Hopping / Segment Mismatch)
- Happens in multi-bit or segmented DACs.
- Small errors occur when switching between internal segments or gain stages.
- Causes amplitude discontinuities or glitch-like artifacts.

2. Glitch Energy
- Brief voltage spikes during code transitions, especially at major carry points.
- Caused by switch timing mismatch or capacitive coupling.
- Results in transient noise or distortion.

3. Differential Non-Linearity (DNL)
- Step sizes between adjacent codes deviate from ideal.
- High DNL can cause missing codes and audible distortion.

4. Integral Non-Linearity (INL)
- Overall deviation of the DAC’s transfer function from a perfect line.
- Affects accuracy and introduces harmonic distortion.

5. Code-Dependent Switching Noise
- Switching behavior creates code-dependent electrical noise.
- Appears as spurious tones or modulated noise floor in the output.

6. Thermoelectric Distortion (Thermocouple Effects)
- Small voltages generated by temperature gradients across different metals.
- Can introduce DC drift and low-frequency distortion in precision DACs.

7. Mismatched Reference Loading
- DAC reference inputs draw current that varies with code.
- If not properly buffered, this causes gain errors and signal-dependent distortion.

8. Clock Jitter (in Delta-Sigma & Oversampling DACs)
- Uncertainty in clock timing introduces phase noise.
- Causes distortion—especially noticeable in high-frequency or high-resolution signals.

9. Power Supply Rejection Issues
- Noise or ripple on power rails couples into the output.
- Poor PSRR leads to spurious tones and added harmonics.

10. Output Settling Errors
- Occurs when the DAC output doesn’t reach its final value quickly or accurately.
- Can cause timing-related distortion in fast or high-resolution systems.

@jetter I do understand why people don’t care about diminishing returns when buying expensive DACs.

Not only DACs, but also other components—such as streamers and cables. Dealers need to make a living and sustain their businesses. Many audiophiles have disposable income or retirement funds to support their hobby.

There are those who may not be able to afford such gears, yet still make a fuss—several of whom are present in this forum.