It has been a long-standing goal to improve dispersive qubit readout with squeezed light. However, injected external squeezing (IES) cannot enable a practically interesting increase in the signal-to-noise ratio (SNR), and simultaneously, the increase of the SNR due to the use of intracavity squeezing (ICS) is even negligible. Here, we counterintuitively demonstrate that using IES and ICS together can lead to an exponential improvement of the SNR for any measurement time, corresponding to a measurement error reduced typically by many orders of magnitude. More remarkably, we find that in a short-time measurement, the SNR is even improved exponentially with twice the squeezing parameter. As a result, we predict a fast and high-fidelity readout. This work offers a promising path toward exploring squeezed light for dispersive qubit readout, with immediate applications in quantum error correction and fault-tolerant quantum computation.
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