Can I use Set-AIPFileLabel to apply a sensitivity label to a file directly in SharePoint?

I am wondering if Set-AIPFileLabel can be used to apply sensitivity label to a file on SharePoint Online directly (without having to download the file to a local drive - apply label - reupload). I can't seem to find any information on this. Ideally I am looking to apply a sensitivity label (with encryption) automatically, which as far as I am aware is not supported for user-defined permission labels.