Preheat your oven to 400°F. Spray an oven-safe dish with non-stick cooking spray and set it aside.
Bring a medium pot of water to a boil. Add the gnocchi and cook it according to the package instructions, about 3-4 minutes. Drain into a colander and set aside.
Return the pot to the stove and heat the olive oil over medium-high heat. When the oil is hot, add the mushrooms and sliced shallots, and cook, stirring occasionally, until softened and slightly browned, about 5 minutes. Stir in the garlic and cook until fragrant, about 1 minute. Stir in the red wine, tomato paste, salt, black pepper and nutmeg. Bring to a simmer and cook, stirring frequently, until the wine is almost completely evaporated, about 2-3 minutes. Stir in the cherry tomatoes, tomato sauce and balsamic vinegar. Cook until the sauce is bubbling and some of the tomatoes are starting to burst, about 5-6 minutes more.
Remove the pot from the heat. Add the kale, heavy cream, and the cooked gnocchi, stirring to coat everything in the sauce. Transfer about half of the gnocchi/vegetable mixture to your prepared baking dish. Top with about half of the torn mozzarella cheese. Then add the remaining gnocchi/vegetable mixture, and top with the remaining mozzarella cheese.
Transfer the baking dish to your preheated oven and bake for 10 minutes. The cheese should be melted and the sauce should be slightly bubbly. If you want to brown the cheese, you can place the baking dish under your broiler for 1-2 minutes.
Remove the baking dish from your oven and allow the baked gnocchi to rest for 5 minutes before serving. Garnish with fresh basil.
Leftovers can be stored in an airtight container in your refrigerator for 2-3 days.
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