they might be giants

I don't think the phrase is every specifically used in the film. The relevant conversation happens between Holmes and Watson in the back of a cab about halfway through the movie.

The exact phrase "they might be giants" is not spoken. Here's the passage:

"[Don Quixote] thought that every windmill was a giant. That's insane. But, thinking that they might be, well... All the best minds used to think the world was flat. But what if it isn't? It might be round. And bread mold might be medicine. If we never looked at things and thought of what might be, why we'd all still be out there in the tall grass with the apes."

"I say, you move, and you're dead!" "And I say, I'm dead and I move..."