Heat a heavy skillet over medium-high heat. Cook and stir sausage in the hot skillet until crumbly and no longer pink, about 7 minutes. Add mushrooms, shallots, butter, and oil; cook, stirring occasionally, until mushrooms and shallots are soft and beginning to brown, about 5 minutes. Add garlic and cook for 1 to 2 minutes. Pour in white wine and simmer until wine has reduced by half, about 5 minutes.

Meanwhile, bring a large pot of lightly salted water to a boil. Cook gnocchi in boiling water until pasta floats to the top, 2 to 4 minutes. Drain.

Add gnocchi, cream, Italian herbs, pepper flakes, salt, and pepper. Cook over medium-low heat until sauce has thickened, about 10 minutes.