The so-called "Magnificent Seven" stocks, a list that includes Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla (TSLA -1.11%), have led the market higher in 2023. And as a result, they continue to be on every investor's watch list. 

But there's one company here that might have more potential than the rest. I'm talking about Tesla in particular. Its founder and CEO, Elon Musk, has huge ambitions. But before rushing to invest, it's best to understand both a bull and bear argument. 

Let's take a closer look at one clear reason investors should buy this top electric vehicle (EV) stock, while also considering why it's a good idea to avoid it like the plague. 

Autonomous ambitions 

Tesla shares are an obvious buy for investors who are bullish on the company's ability to introduce full self-driving (FSD) capabilities. This is the ultimate goal for Musk and the business. Bringing EVs to more consumers gets the attention now, but introducing autonomous vehicles (AV) is the true north. 

It's not hard to see why. Musk wants to one day launch a global robotaxi service with FSD cars. In this scenario, he says Tesla would experience "quasi-infinite demand" and generate huge margins that will make the current financial numbers look "silly." Shareholders have been concerned that Tesla's margins have been shrinking in recent quarters, as it engages in price wars to maintain its market share. But these worries won't matter if this long-term vision plays out. 

So, Musk's grand plan is to operate an Uber-like service with its own cars, as well as what I'd assume is its own internally developed mobile app. Again, the revenue and profit potential could be enormous, simply because there would be no need for drivers, which are the highest expense item in a typical ride-hailing trip. That's why the business is investing heavily in Dojo, its supercomputer that utilizes artificial intelligence to help analyze all the driving and traffic data Tesla collects from its vehicles. 

But while Tesla might be a leader in the EV race, a massive market opportunity will naturally invite stiff competition. And this is certainly the case here. Alphabet's Waymo is a formidable opponent that has the resources from both a financial and talent perspective to introduce this technology to the masses. 

There's also Cruise, a majority-owned subsidiary of General Motors. The leadership team has set a goal of having 1 million robotaxis on roads by 2030. 

Nonetheless, it's always difficult to bet against Elon Musk. I think his robotaxi focus is the right strategy. Those investors who agree will find the stock to be a smart buy. 

How much upside is there? 

As of this writing, Tesla's market cap sits at a whopping $792 billion. With shares catapulting nearly 2,000% in the past decade, it's no surprise that this is now one of the most valuable enterprises in the world.  

Investors can't ignore the law of large numbers in this situation. I don't think it's reasonable to assume that Tesla can post the same revenue growth in the decade ahead as it did in the past. And with a market cap already so high, how much more valuable can this business become? These are the right questions to ask. 

Musk has done a wonderful job of building excitement and enthusiasm for Tesla from the investment community. And the stock shows it. Shares currently trade at a trailing price-to-earnings ratio of 71.7. That is no doubt expensive. 

But the stock's huge market cap and valuation might mean that the optimism is fully priced in and then some. Investors who have set more realistic expectations about the direction of this company will find this enough of a reason to avoid the stock right now.