In a large skillet over medium heat, add olive oil. Once hot, crumble in the Italian sausage. Cook until browned and fully cooked through, about 5–7 minutes.
Stir in the minced garlic and sliced mushrooms into the skillet with the sausage. Cook for another 3–4 minutes until the mushrooms are tender.
Add the potato gnocchi into the skillet along with chicken broth (or water) if using. Stir gently so everything combines well. Cook according to package instructions until the gnocchi float to the surface—this usually takes around 2–3 minutes.
Once the gnocchi are done cooking, fold in fresh spinach followed by heavy cream. Let it simmer gently for another minute until everything is heated through and combined.
Finally, stir in grated Parmesan cheese along with salt, pepper, and optional red pepper flakes if you like some heat. Mix until well incorporated and creamy.