If for some reason want to apply formatting, e.g., italics, underlining, bold, etc., _before_ uploading to Google Docs, then there are some non-Microsoft, non-Google, non-AI alternatives for creating .docx from .txt. Simply use the alternative software to apply the formatting to the .docx before uploading to Google Docs.

For example, Office NX TextMaker for Android can convert .txt to .docx and "Save As" .docx. No internet connection needed. Their website mentions ChatGPT but I tested TextMaker Revision S1223 from Aurora Store and there is no AI. I did not allow TextMaker to connect to the internet. No idea what may happen if internet access is allowed.