Let's consider following Java sources:

m1/module-info.java:
    module m1 { exports p; }
m1/p/C1.java:
    package p;
    class C1 {}

m2/module-info.java:
    module m2 { exports p; }
m2/p/C2.java:
    package p;
    class C2 {}

When these sources are compiled and resulted class-files are processed by annotation processor following error is produced:

error: module reads package p from both m2 and m1
1 error

No annotation processing happens in this case.

This module graph inconsistency doesn't seem critical for running annotation processing and presented behavior looks like a bug.

The minimized test case is attached, in order to reproduce the bug please:
1. Unzip attached archive to some dir, say A, on Unix/Linux machine.
2. Modify A/Test65/test.sh by setting JDK_HOME variable to your JDK installation dir.
3. Run A/Test65/test.sh.

It outputs:

Annotation processing of sources:
Root element: p.C1
Root element: p.C2
Root element: m1
Root element: m2
./modules/m1/module-info.java:1: warning: [module] module name m1 should avoid terminal digits
module m1 {
       ^
./modules/m2/module-info.java:1: warning: [module] module name m2 should avoid terminal digits
module m2 {
       ^
2 warnings

Annotation processing of class files:
error: module reads package p from both m2 and m1
1 error