Textures were glitching. As per suggestions, I downgraded from 451.85 driver to 451.67. After restarting the game, shaders compiled and it was fixed.
However, after further researching other user experiences, I upgraded back to 451.85 and noticed that the issue was still fixed for me after re-compiling the shaders again. I then set anisotropic filtering back to application controlled, and textures started glitching again. Re-compiled shaders, the issue was fixed. Set it back to x16 anisotropic filtering, flickering textures. Recompild, fix.
The fix is not downgrading your textures, but simply re-compiling shaders after having changed the anisotropic filtering settings in the nvidia control panel.
In order to help other users who change anistrophic filtering, I've made another edit here (https://www.pcgamingwiki.com/wiki/Horizon_Zero_Dawn#In-game_anisotropic_filtering_setting_does_not_work) to let users know that they need to delete the shaders file to recompile shaders after changing this setting, or else they'll get flickering textures.