After rising 830% over the past 12 months, Tesla (TSLA 1.78%) now boasts a $430 billion market capitalization. You'd think the stock couldn't go much higher after such a wild run-up, but a billionaire investor who has held shares of Tesla since it had a market cap of about $40 billion thinks there's still enormous upside to come for this growth stock.

The billionaire making this call on Tesla stock is Ron Baron -- the legendary investor who oversees Baron Capital. Baron Capital initially accumulated 1.6 million shares at a split-adjusted cost basis of about $44. Baron has done well with his Tesla stock, to say the least.

A Model X in a garage.

Image source: Tesla.

Is Tesla still undervalued?

Baron has been outspoken about his bullishness on Tesla stock since Baron Capital initiated its position. It's not surprising to see him still cheering on Tesla; what's surprising is just how much upside he thinks still remains for the stock.

"In the short term, I can't have any clue about what's going to happen," Baron said in an interview this week on CNBC's Squawk Box. But he does think that over the long haul, Tesla's market cap will eventually be worth $1 to $2 trillion. "And with what developments have taken place recently, I think $2 trillion is the right number," the investor said.

Specifically, Baron thinks that Tesla will compound its sales at about 50% annually in the coming years, leading to an automotive business with sales between $500 billion and $700 billion in annual sales in 10 years -- and that's "just cars," Baron emphasizes. "Batteries is another unbelievable business, which I'm very excited about," Baron added. 

These results will help Tesla stock double two to three more times over the next 10 years, Baron estimates.

Is this billionaire investor onto something?

If his bullish view pans out and the company is generating about $800 billion in annual revenue in 10 years (assuming $600 billion from automotive and $200 from Tesla's energy business), a 5% net profit margin on this revenue would yield $40 billion of net income. For comparison, Apple has $58 billion of net income and a nearly $2.1 trillion market cap.

A $1 to $2 trillion market cap in 10 years is certainly possible if Tesla can actually grow its revenue this rapidly and achieve a net profit margin of 5% or more.

Still, investors should be cautious of such bullish forecasts for Tesla's sales. For the automaker to pull this off, it will need to both maintain its leadership in electric vehicles and gain significant market share from other automakers. In addition, Tesla's energy business is still very small -- accounting for just 6% of total sales. Today, Tesla has just $26 billion in annual revenue -- a long way off from $500 billion-plus in sales.

Could Tesla be as successful as Ron Baron thinks it will be? It's possible. After all, Tesla's revenue has grown at a rate of 50% annually over the last five years. Further, the investor has certainly made some good calls on Tesla over the last five years, aiding his credibility. Still, investors should consider forecasts like this to be more speculative than informative. Investing is a game of making the most of uncertainties -- and there's a lot of guesswork involved in coming up with how Tesla will grow its revenue to $500 billion-plus over the next 10 years.