We've had this discussion before here: Neanderthals were, in all likelihood, smarter than Homo sapiens, had a higher average brain size, and coexisted with humans, yet still went extinct. I believe the prevailing theory is that humans were more social and reproduced faster, which outweighed the intelligence gap at the time.

For an analogy, think about the Psilons in Master of Orion 2: they're very intelligent, but are weak early in the game. Given enough time, they'll have much better technology than everyone else, but they have to live that long first.

Also, it's generally accepted that it's the brain mass ratio that matters (for some reason), not the absolute brain size. Presumably this has something to do with how a higher body mass means a higher "computational load" on the brain, so to get more intelligence, you need higher brain mass per unit body mass.