Not really, it can make sense. By "reading" your messages/notifications they could just perform semantic search/categorization, or now, run a local LLM. It doesn't necessarily mean they send that data to servers or make people actually read it.
Encryption just means the data stored on your device is not saved in plaintext. So if somebody gets their hands on your phone, they won't be able to hot-wire the memory chip and directly read all the data.