Five stocks that trade on U.S. exchanges currently have market caps of $1 trillion or more. Tesla (TSLA 15.50%) isn't one of them. 

But Tesla CEO Elon Musk thinks that his company could leapfrog past trillion-dollar market cap members Apple, Microsoft, Alphabet, Amazon, and Nvidia. Musk stated during Tesla's third-quarter earnings call that artificial intelligence (AI) could "make Tesla the most valuable company in the world by far." Here's how he thinks it could happen.

Fully autonomous cars

Unsurprisingly, Musk mentioned fully autonomous cars as the first way that AI could turbocharge Tesla's growth. He thinks the "economics of the system [with fully autonomous vehicles] are just insanely positive."

Musk noted that passenger vehicles are currently only used around 10 to 12 hours per week on average. There are also other costs associated with parking, insurance, and maintenance. People spend a lot of money for such low utilization.

With fully autonomous cars, though, Musk speculated that utilization rates could increase by 5x. He said if that happens, then Tesla will be "a hardware company with software margins."

The multibillionaire proclaimed that he's "very excited about our progress with autonomy." He stated that Tesla's FSD (fully self-driving) beta vehicles have already driven over 500 million miles and counting. Musk believes that very few people "understand the profundity of the Tesla AI system." He added: "It's basically baby AGI [artificial general intelligence]. It has to understand reality in order to drive, baby AGI."

Fully autonomous robots

Fully self-driving cars are only part of the equation, though. Musk said in Tesla's Q3 call, "If you have fully autonomous cars at scale and fully autonomous humanoid robots that are truly useful, it's not clear what the limit is."

Again, Musk likes the economics of autonomous robots. He explained, "[I]f you no longer have a constraint on people, effectively, you've got a humanoid robot that can do as much as you'd like. Your economy is wisely infinite or infinite for all intents and purposes."

Musk told analysts on the Q3 call that the same AI software behind Tesla's fully autonomous cars will power its Optimus humanoid robots. He predicted that Optimus will be able "to learn how to do things simply by looking." Musk also believes that "robots will manufacture the robots" in the future.

Other companies, including privately held Boston Dynamics, are developing humanoid robots as well. However, Musk doesn't appear to be worried about the competition. He said, "I don't think anyone is going to do it better than Tesla by a long shot." 

Will Musk be proven right?

Musk acknowledged that he's "been overly optimistic" in the past about how quickly Tesla will deliver fully autonomous cars. Is he being unrealistically optimistic in this case? Maybe.

Despite being directly asked by analysts during the Q3 call, Musk wouldn't provide any timing about when Tesla plans to launch a robotaxi service. The company is already behind General Motors' Cruise and Alphabet's Waymo in the robotaxi market. There's a pretty good argument to be made that GM is actually a better stock to play the robotaxi opportunity than Tesla is.

Musk also clearly linked Tesla's AI progress with fully autonomous cars with its efforts to develop a fully autonomous humanoid robot. If the company slips in one area, it will probably slip in both.

We shouldn't overlook the fact that Tesla's path to becoming the most valuable company in the world doesn't depend only on Tesla. AI will also serve as a tremendous tailwind for Apple, Microsoft, Alphabet, Amazon, and Nvidia. Tesla could be successful yet still not catch up with these current members of the $1 trillion club.

Still, I wouldn't dismiss the possibility that Musk could eventually be proven right. AI really will be, in his own words, a "massive game changer." If Tesla wins in the fully autonomous vehicle and robot markets, it just might one day be the biggest company on the planet.